Hang Ten Group Holdings Limited (Incorporated in Bermuda with Limited Liability) on the Stock Exchange of Hong Kong Limited by Way of Introduction

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this document or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Akai Holdings Limited (In Compulsory Liquidation), you should at once hand this document together with the enclosed forms of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This document does not constitute a public offering of securities nor is it calculated to invite public offers for securities and it must not be used for the purposes of offering or inviting offers for any securities to the public.

Proposal for Akai Holdings Limited (In Compulsory Liquidation) (incorporated in Bermuda with limited liability) by way of a shareholders’ scheme of arrangement (under section 99 of the Companies Act 1981 of Bermuda) and withdrawal of the listing of the shares of Akai Holdings Limited (In Compulsory Liquidation) and the listing of the ordinary shares of

Hang Ten Group Holdings Limited (incorporated in Bermuda with limited liability) on The Stock Exchange of Hong Kong Limited by way of introduction

Sponsor

Kim Eng Capital (Hong Kong) Limited

Co-Sponsor

Independent financial adviser to shareholders of Akai Holdings Limited (In Compulsory Liquidation)

A letter from the joint and several liquidators of Akai Holdings Limited (In Compulsory Liquidation) is set out on pages 38 to 41 of this document. A letter from Horwath Capital Asia Limited, the independent financial adviser to shareholders of Akai Holdings Limited (In Compulsory Liquidation), is set out on pages 91 to 101 of this document. A letter from the board of directors of Hang Ten Group Holdings Limited is set out on pages 42 to 90 of this document. Notices of meetings of shareholders of Akai Holdings Limited (In Compulsory Liquidation) to be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wan Chai, Hong Kong on 25 November 2002 are set out on pages 366 to 368 of this document. Whether or not you intend to attend any of the meetings, you are requested to complete the enclosed forms of proxy and return them in accordance with the instructions printed respectively thereon as soon as possible and in any event not less than 48 hours before the times appointed for the holding of the meetings. This document is published in connection with the introduction on The Stock Exchange of Hong Kong Limited of the entire issued and proposed issued ordinary share capital of Hang Ten Group Holdings Limited and contains particulars given in compliance with the Companies Act 1981 of Bermuda, the Hong Kong Code on Takeovers and Mergers, the Securities (Stock Exchange Listing) Rules of Hong Kong and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to Akai Holdings Limited (In Compulsory Liquidation), Hang Ten Group Holdings Limited and its subsidiaries, the Proposal (as defined herein), and the Scheme (as defined herein). Subject to the granting of the listing of, and permission to deal in, the shares of HK$0.001 each in the capital of Hang Ten Group Holdings Limited on The Stock Exchange of Hong Kong Limited as well as compliance with the stock admission requirements of Hong Kong Securities Clearing Company Limited, the shares will be accepted as eligible securities by Hong Kong Securities Clearing Company Limited for deposit, clearance and settlement in the Central Clearing and Settlement System with effect from the commencement date of dealings in the shares or such other date as determined by Hong Kong Securities Clearing Company Limited. All activities under the Central Clearing and Settlement System are subject to the General Rules of the Central Clearing and Settlement System and Central Clearing and Settlement System Operational Procedures in effect from time to time.

31 October 2002 CONTENTS

Neither Akai Holdings Limited (In Compulsory Liquidation) nor the joint and several liquidators of Akai Holdings Limited (In Compulsory Liquidation) nor Hang Ten Group Holdings Limited have authorised anyone to provide you with information that is different from the contents of this document. You should rely only on the information contained in this document.

Any information or representation not contained in this document must not be relied on by you as having been authorised by Akai Holdings Limited (In Compulsory Liquidation), the joint and several liquidators of Akai Holdings Limited (In Compulsory Liquidation), Hang Ten Group Holdings Limited, Kim Eng Capital (Hong Kong) Limited, Asian Capital (Corporate Finance) Limited, Horwath Capital Asia Limited or the directors of any of them or any other person involved in the Proposal (as defined herein).

Page

Definitions ...... 1

Important note on information relating to Akai Holdings Limited (In Compulsory Liquidation) and its subsidiaries ...... 10

Responsibility statements ...... 11

Summary of the Proposal ...... 13

Parties involved in the Proposal ...... 22

Expected timetable ...... 23

Risk factors ...... 25

Directors of Hang Ten Group Holdings Limited ...... 31

Corporate information relating to Hang Ten Group Holdings Limited ...... 32

Industry overview ...... 34

Letter from the joint and several liquidators of Akai Holdings Limited (In Compulsory Liquidation) ...... 38

Letter from the board of directors of Hang Ten Group Holdings Limited ...... 42

Letter from Horwath Capital Asia Limited ...... 91

Explanatory statement (in compliance with Section 100 of the Companies Act 1981 of Bermuda) ...... 102

Ð i Ð CONTENTS

Page

Appendix I Ð Summary of the terms of the Warrants and CPS ...... 120

Appendix II Ð Accountants’ report ...... 123

Appendix III Ð Pro forma financial information about Hang Ten Group Holdings Limited ...... 161

Appendix IV Ð Valuation report ...... 166

Appendix V Ð Information on Akai Holdings Limited (In Compulsory Liquidation) and its subsidiaries ...... 198

Appendix VI Ð Summary of the constitution of Hang Ten Group Holdings Limited and Bermuda company law ...... 236

Appendix VII Ð Statutory and general information on Hang Ten Group Holdings Limited ...... 259

Scheme of arrangement ...... 353

Order on originating summons ...... 363

Notice of Scheme Meeting ...... 366

Notice of Special General Meeting ...... 368

Form of proxy for Scheme Meeting

Form of proxy for Special General Meeting

Ð ii Ð DEFINITIONS

In this document (other than the scheme of arrangement, the notice of the scheme meeting, the notice of the special general meeting, the order on originating summons, the form of proxy for the scheme meeting and the form of proxy for the special general meeting) the following expressions shall, unless the context otherwise requires, have the meanings respectively set out opposite such expressions:

“Akai” Akai Holdings Limited (In Compulsory Liquidation), an exempted company incorporated in Bermuda with limited liability

“Akai Directors” the directors of Akai

“Akai Group” Akai and its Subsidiaries

“Akai Share(s)” the issued ordinary share(s) of HK$0.10 each credited as being fully paid up in the share capital of Akai

“Akai Shareholders” the Persons listed in Akai’s register of members as shareholders of Akai from time to time

“Announcement Date” the date of the announcement of the Proposal on 13 May 2002

“Asian Capital” Asian Capital (Corporate Finance) Limited, an investment adviser and dealer registered under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong), co-sponsor of the Introduction

“Asian Wide” Asian Wide Services Limited, a company incorporated in BVI and owned as to 30% by Mr. Kenneth Hung, 30% by Mrs. Hung Cheng Sui Tsen, the mother of Mr. Kenneth Hung, and 20% each by Ms. Peggy Hung and Ms. Pamela Hung, both of them being sisters of Mr. Kenneth Hung

“associate(s)” has the meaning ascribed thereto under the Listing Rules

“Bermuda Court” the Supreme Court of Bermuda

“Best Standand” Best Standand Limited, a party acting in concert with the Investors which is beneficially owned as to 50% each by Mr. Chow Sik Wak and Ms. Wang Xin, each of whom is not connected with any of the directors, chief executive or substantial shareholders of Hang Ten or its subsidiaries or any of their respective associates (as defined under the Listing Rules) and will be subscribing for an interest of approximately 2.10% in the enlarged share capital of Hang Ten (BVI) for cash consideration of HK$20 million. Upon or prior to Closing, the equity interest in Hang Ten (BVI) held by Best Standand will be exchanged for 463,000,000 Hang Ten Shares (with one Warrant for every five Hang Ten Shares) and 153 CPS

“Business Day” a day (other than Saturday or Sunday) on which banks are open for ordinary banking business in Hong Kong and Bermuda

Ð 1 Ð DEFINITIONS

“BVI” the British Virgin Islands

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

“Claim” any debt, liability or obligation of Akai which would be admissible to proof in an insolvent winding-up of Akai under the Companies Ordinance or the Companies Act commencing on the Effective Date

“Closing” the successful implementation of the Proposal

“Closing Date” the Business Day on which the Liquidators issue the Closing Notice

“Closing Notice” the written closing notice to be given by the Liquidators to Hang Ten under the Restructuring Agreement to indicate to the other parties to the Restructuring Agreement that the Liquidators are in a position to complete the Proposal

“Code” the Hong Kong Code on Takeovers and Mergers

“Committee of Inspection” the committee of inspection of Akai

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

“Companies Ordinance” the Companies Ordinance (Chapter 32 of the Laws of Hong Kong)

“Costs” the fees, costs and expenses of the Liquidators, their advisers and Akai associated with the negotiation, preparation and implementation of the Proposal

“Courts” collectively, the Hong Kong Court and the Bermuda Court

“CPS” 7,307 convertible preference shares of HK$10,000 each to be issued on the Closing Date by Hang Ten, convertible into Hang Ten Shares at a conversion price of HK$0.001 per Hang Ten Share (subject to adjustments)

“Creditors” any Person with a Claim

“Creditors’ Scheme Meetings” the meetings of the Creditors convened on 26 September 2002 by the direction of the Bermuda Court and the Hong Kong Court for the purpose of considering and, if thought fit, approving the Creditors’ Schemes

Ð 2 Ð DEFINITIONS

“Creditors’ Schemes” the proposed schemes of arrangement for Akai pursuant to section 166 of the Companies Ordinance and section 99 of the Companies Act made between Akai and the Creditors, with or subject to any modification thereof, or addition thereto or conditions approved by the Hong Kong Court or the Bermuda Court

“Creditors’ Share Allocation” 2,100,000,000 Hang Ten Shares to be allotted to Akai on the terms set out in the Restructuring Agreement

“Designated Person” Metro Capital Holdings Limited, a company wholly-owned by Mr. Lo Bing Kuen and his family members, a party acting in concert with the Investors, which is designated by the Investors to receive Hang Ten Shares (with associated Warrants) to be issued pursuant to the Sale and Purchase Agreement in consideration of its provision of consulting services to the Investors in connection with the Proposal

“Director(s)” the director(s) of Hang Ten

“Effective Date” the date on which the Schemes become effective by virtue of the delivery of an office copy of the order of the Bermuda Court sanctioning the Scheme and the Creditors’ Scheme to the Registrar of Companies in Bermuda for registration and the delivery of an office copy of an order of the Hong Kong Court sanctioning the Creditors’ Scheme to the Registrar of Companies in Hong Kong for registration

“Eligible Employee” any employee (whether full time or part time employee, including any executive directors but not any non-executive directors) of Hang Ten, its subsidiaries or any Invested Entity

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

“Explanatory Statement” the explanatory statement relating to the Scheme as required by section 100 of the Companies Act, the text of which is set out on pages 102 to 119 of this document

“Final Record Date” the final record date for determining the entitlements of the Akai Shareholders under the Scheme, being the Business Day immediately preceding the Effective Date

“Hang Ten” Hang Ten Group Holdings Limited, a company incorporated in Bermuda with limited liability on 17 July 2002, the ordinary shares of which, subject to the Scheme becoming effective, are proposed to be listed on the Stock Exchange by way of Introduction and which will become the holding company of Hang Ten (BVI) upon completion of the Sale and Purchase Agreement on or before the Closing Date Ð 3 Ð DEFINITIONS

“Hang Ten (BVI)” Hang Ten International Holdings Limited, a company incorporated in the British Virgin Islands with limited liability, which is owned as to 63% by Asian Wide, 4% by Mr. Kenneth Hung, 2% by each of Mr. Dennis Kung, Ms. Peggy Hung and Ms. Pamela Hung, 25% by YGM and 2% by Ms. Wang and Ms. Kao collectively as at the Latest Practicable Date and will become a wholly-owned subsidiary of Hang Ten upon completion of the Sale and Purchase Agreement

“Hang Ten (BVI) Group” Hang Ten (BVI) and its subsidiaries

“Hang Ten Group” Hang Ten and its subsidiaries following completion of the Sale and Purchase Agreement

“Hang Ten Korea” Hang Ten Korea Corp., a company incorporated in South Korea with limited liability and owned as to 92% by ILC as at the Latest Practicable Date

“Hang Ten Shares” ordinary share(s) of HK$0.001 each in the share capital of Hang Ten

“HKSCC” Hong Kong Securities Clearing Company Limited

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

“Hong Kong Court” the High Court of Hong Kong

“Horwath” Horwath Capital Asia Limited, an investment adviser registered under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong), the independent financial adviser to the Akai Shareholders

“ILC” ILC International Corporation, a company incorporated in the British Virgin Islands with limited liability, a subsidiary owned as to 97.01% and 2.99% by Hang Ten (BVI) and China Investment & Development Company Limited respectively

“ILC Group” ILC and its subsidiaries

“Introduction” the listing of the Hang Ten Shares on the Stock Exchange by way of introduction

“Invested Entity” any entity in which any member of the Hang Ten Group holds any equity interest

“Investors” YGM, the Kung Family, Ms. Wang and Ms. Kao who are all shareholders of Hang Ten (BVI) as at the Latest Practicable Date

Ð 4 Ð DEFINITIONS

“Investors’ Securities Allocation” (a) 21,200,000,000 Hang Ten Shares credited as fully paid up;

(b) 7,038 CPS; and

to be issued to the Investors and the Designated Persons

“Kim Eng” Kim Eng Capital (Hong Kong) Limited, an investment adviser registered under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong), the sponsor of the Introduction

“Kung Family” Mr. Dennis Kung, Mr. Kenneth Hung, Ms. Peggy Hung, Ms. Pamela Hung and Asian Wide

“Latest Practicable Date” 28 October 2002, being the latest practicable date prior to the printing of this document for ascertaining certain information for inclusion in this document

“Liquidators” collectively, Messrs. Nicholas Timothy Cornforth Hill and Fan Wai Kuen, Joseph of RSM Nelson Wheeler Corporate Advisory Services Limited and Mr. R. Craig Christensen of Arthur Morris and Co. of Hamilton, Bermuda, being the joint and several liquidators of Akai

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

“Long Stop Date” 31 December 2002 or such later date as may be agreed between Hang Ten (BVI), the Investors, Akai (acting through the Liquidators) and the Liquidators and approved in its discretion by the Stock Exchange

“Macau” the Macau Special Administrative Region of the PRC

“Mr. Dennis Kung” Mr. Dennis Kung Ging Kong, who is the father of Mr. Kenneth Hung, Ms. Peggy Hung and Ms. Pamela Hung

“Mr. Kenneth Hung” Mr. Kenneth Hung, an executive Director and a shareholder of Asian Wide which will be the controlling shareholder of Hang Ten upon Closing

“Ms. Kao” Ms. Kao Yu Chu, an executive Director

“Ms. Wang” Ms. Wang Li Wen, an executive Director

“Option” any option that may be granted under the Share Option Scheme

Ð 5 Ð DEFINITIONS

“Other Investors” Best Standand and Raytop, being the Persons listed in Hang Ten (BVI)’s register of members, other than the Investors, immediately prior to the issue of the Closing Notice, who, for the avoidance of doubt, are not connected with the directors, the chief executives and the substantial shareholders of Hang Ten and its Subsidiaries and their respective associates (within the meaning of the Listing Rules) and each of the Other Investors is a party acting in concert with the Investors

“Other Investors’ Securities (a) 810,000,000 Hang Ten Shares credited as fully paid up; Allocation” (b) 269 CPS; and

to be issued to the Other Investors

“Person” an individual, partnership, company, body corporate, joint stock company, trust, unincorporated association or body of persons (including a partnership or consortium), joint venture or other entity, or a government or any political subdivision or agency thereof

“Petitioning Creditors” Den Danske Bank Aktieseleskab, Hong Kong Branch, Bank of Scotland, Hong Kong Branch and Emirates Bank International (Public Joint Stock Company), Hong Kong Branch

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

“Proposal” the proposal involving the Schemes, completion of the Restructuring Agreement and the acquisition of Hang Ten (BVI) by Hang Ten as described in the section headed “Explanatory Statement (in compliance with Section 100 of the Companies Act 1981 of Bermuda)” in this document

“Proposed Spin-off” the proposed separate listing of YGM’s interest in Hang Ten (BVI) on the Stock Exchange pursuant to the implementation of the Proposal

“Raytop” Raytop Limited, a party acting in concert with the Investors which is beneficially wholly-owned by Mr. Ng Kwok Wah, who is not connected with any of the directors, chief executive or substantial shareholders of Hang Ten or its subsidiaries or any of their respective associates (as defined under the Listing Rules) and will be subscribing for an interest of approximately 1.58% in the enlarged share capital of Hang Ten (BVI) for cash consideration of HK$15 million. Upon or prior to Closing, the equity interest in Hang Ten (BVI) held by Raytop will be exchanged for 347,000,000 Hang Ten Shares (with one Warrant for every five Hang Ten Shares) and 116 CPS

Ð 6 Ð DEFINITIONS

“Relevant Period” a period that commences from the six calendar months prior to the Announcement Date up to and including the Latest Practicable Date

“Restructuring Agreement” the restructuring agreement dated 16 April 2002 as amended by the supplemental agreement dated 14 May 2002 between, amongst others, Akai (acting through the Liquidators), the Liquidators, Hang Ten (BVI) and the Investors in relation to the implementation of the Proposal

“Restructuring Documents” collectively the Restructuring Agreement, the Scheme, the Sale and Purchase Agreement, the Warrant Instrument and all other documents necessary to implement the Proposal

“RSM Corporate” RSM Nelson Wheeler Corporate Advisory Services Limited

“Sale and Purchase Agreement” the agreement entered into between the Investors, the Other Investors and Hang Ten on 28 October 2002 pursuant to which the Investors and the Other Investors will, on or before the Closing Date, transfer their respective shares in Hang Ten (BVI) to Hang Ten in consideration of the Investors’ Securities Allocation and the Other Investors’ Securities Allocation

“Scheme” the proposed scheme of arrangement in relation to Akai pursuant to section 99 of the Companies Act and made between Akai and the Akai Shareholders, with or subject to any modification thereof or addition thereto or condition approved or imposed by the Bermuda Court

“Scheme Costs” those costs, charges, expenses and disbursements necessarily and properly incurred after the Effective Date, in connection with the administration and implementation of the Scheme including the fees and remuneration of the Scheme Trustee

“Scheme Fund” all amounts credited from time to time to the Scheme Fund Account

“Scheme Fund Account” an interest bearing trust account to be opened in the name of the Scheme Trustee or the Scheme Trustee’s nominee with a licensed bank in Hong Kong for the purposes of and for the benefit of those Persons entitled under the Scheme into which the Scheme Trustee shall place and deposit the Scheme Fund

“Scheme Meeting” the meeting of Akai Shareholders to be convened by direction of the Bermuda Court for the purpose of considering and if thought fit, approving the Scheme, the notice of which is set out on pages 366 and 367 of this document, or any adjournment thereof

Ð 7 Ð DEFINITIONS

“Scheme Trustee” such Person as the Liquidators may nominate to hold on trust the Scheme Fund

“Schemes” collectively, the Scheme and the Creditors’ Schemes

“SDI Ordinance” the Securities (Disclosure of Interests) Ordinance (Chapter 396 of the Laws of Hong Kong) as amended from time to time

“Securities Ordinance” the Securities Ordinance (Chapter 333 of the Laws of Hong Kong) as amended from time to time

“Security Interest” any mortgage, pledge, lien, charge, assignment, hypothecation or other agreement having the effect of conferring security

“SFC” the Securities and Futures Commission

“Share Option Scheme” the share option scheme conditionally adopted by Hang Ten on 24 October 2002, the terms of which are set out in the paragraph headed “Share Option Scheme” in Appendix VII

“Special General Meeting” the special general meeting of the Akai Shareholders to be held immediately after the Scheme Meeting at the same venue and any adjournment thereof, the notice of which is set out on page 368 of this document

“Sponsors” collectively, Kim Eng and Asian Capital

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Subsidiary” (in relation to any Person) any corporation, partnership, joint venture, trust or estate of which more than 50 per cent. of:

(a) the issued capital stock having ordinary voting power to elect a majority of the board of directors of that corporation (irrespective of whether at the time capital stock of any other class or classes of that corporation shall or might have voting power upon the occurrence of any contingency);

(b) the interest in the capital or profits of that partnership or joint venture; or

is at the time directly or indirectly owned or controlled by that Person, by that Person and one or more of its other Subsidiaries or by one or more of that Person’s other Subsidiaries

Ð 8 Ð DEFINITIONS

“US” the United States of America

“Voting Record Date” 23 November 2002, being the date for determining the entitlements of Akai Shareholders to vote at the Scheme Meeting

“Warrant Instrument” the instrument that sets out the terms and conditions of the Warrants

“Warrant(s)” the unlisted and transferrable warrant(s) exercisable at any time within 3 years from the Closing Date to be issued by Hang Ten to the Investors and the Other Investors pursuant to the Sale and Purchase Agreement which will entitle the holders thereof to subscribe for Hang Ten Shares at HK$0.01 each (subject to adjustments)

“Yangtze” Yangtze Apparel Taiwan Enterprise Limited, a company incorporated in Taiwan with limited liability and beneficially and wholly-owned by ILC

“YGM” YGM Trading Limited, a company incorporated in Hong Kong with limited liability and the ordinary shares of which are listed on the Stock Exchange and a substantial shareholder of Hang Ten upon completion of the Sale and Purchase Agreement

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

“NT$” New Taiwan dollars, the lawful currency of Taiwan

“P$” Philippines Peso, the lawful currency of Philippines

“S$” Singapore dollars, the lawful currency of Singapore

“US$” U.S. dollars, the lawful currency of the U.S.

“W$” Korean Won, the lawful currency of South Korea

“sq. ft.” square feet

“sq. m.” square metres

“%” per cent.

Unless otherwise specified, the conversion of US dollars into Hong Kong dollars in this document is based on an exchange rate of HK$7.8 to US$1.0 and the conversion of NT$ into Hong Kong dollars in this document is based on an exchange rate of HK$1.0 to NT$4.45. These exchange rates have been used, where applicable, for illustration purposes only and do not constitute a representation that any amounts have been, could have been or may be exchanged at these or any other rates.

Ð 9 Ð IMPORTANT NOTE ON INFORMATION RELATING TO AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

The following factual information concerning the progress of the liquidation of Akai should be considered carefully when coming to any decision based on the contents of this document. This document contains various historic financial information relating to the Akai Group.

The Liquidators are not directors of Akai. The principal function of the Liquidators is to collect and realise the assets of Akai and distribute such realisations for the benefit of all Persons which have an interest in Akai’s winding up.

Prior to their appointment, the Liquidators had no power to exercise nor exercised any control over the business, property and affairs of the Akai Group. From the dates of their appointments to the date of this document, the Liquidators have not had significant funds to exercise control over the business, property and affairs of the Akai Group and therefore the extent of their control has been extremely limited. In preparing the historic financial information on the share capital, material changes, indebtedness, material litigation, material contracts, dividends and other historic financial information on the Akai Group set out in Appendix V of this document, the Liquidators have been severely restricted by the limited number of books and records of the Akai Group recovered by them.

Persons receiving this document should note the very limited extent to which the Liquidators have been able to verify information in relation to the business, property and affairs of the Akai Group and should, in particular, bear these limitations in mind when reviewing the historic accounting information in relation to the Akai Group.

Ð 10 Ð RESPONSIBILITY STATEMENTS

This document contains particulars given in compliance with the Companies Act, the Code and the Listing Rules for the purpose of giving information to the public with regard to Akai, the Hang Ten Group and the Proposal.

The Directors jointly and severally accept full responsibility for the accuracy of the information in this document (other than that concerning the Akai Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the opinions expressed in this document other than those concerning the Akai Group have been arrived at after due and careful consideration and there are no other facts not contained in this document the omission of which would make any statements in this document, other than those concerning the Akai Group, misleading.

The Liquidators jointly and severally accept full responsibility for the accuracy of the information in this document concerning the Akai Group and themselves and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the opinions expressed in this document concerning the Akai Group and themselves have been arrived at after due and careful consideration and there are no other facts not contained in this document the omission of which would make any statements in this document concerning the Akai Group and themselves misleading.

This document may not be used for the purpose of, and does not constitute, an offer or invitation in any jurisdiction or in any circumstances in which such offer or invitation is not authorised or to any Persons to whom it is unlawful to make such an offer or invitation.

The Directors and the Liquidators recommend that Akai Shareholders consult their professional advisers if they are in any doubt as to the tax implications of the Scheme or the holding of, or dealings in, the Hang Ten Shares. It is emphasised that neither Akai, the Liquidators, Hang Ten, any member of the Hang Ten (BVI) Group, the Sponsors or the Investors or any of their respective employees and directors or any of the other parties involved in the Proposal accepts responsibility for any tax effects on, or liabilities of the Akai Shareholders.

It is the responsibility of any Akai Shareholder outside of Hong Kong wishing to accept the Hang Ten Shares under the Scheme to satisfy himself as to the observance of the laws and regulations of all relevant territories, including the obtaining of any governmental or other consents, and to pay any taxes and duties required to be paid in such territories in connection therewith. Subject to the Executive’s approval, Hang Ten Shares will not be allotted and issued pursuant to the Scheme to the Akai Shareholders whose registered addresses are in a place outside of Hong Kong and where in the opinion of the Directors and the Liquidators, Hang Ten Shares may not be allotted and issued without compliance with registration and/or other legal or regulatory requirements or other special formalities in such jurisdictions or where it is unduly onerous, impracticable or uneconomic for Hang Ten to comply with such local legal, regulatory or other requirements (including Malaysia). Hang Ten reserves the right to refuse to allot and issue the Hang Ten Shares to such Akai Shareholders where it believes that doing so would violate any applicable securities or other laws or regulations or where it would be impracticable or uneconomic to do so. Akai Shareholders whose registered addresses are in Malaysia should review pages 113 and 114 of this document.

Ð 11 Ð RESPONSIBILITY STATEMENTS

This document will be distributed to two Akai shareholders with registered addresses in Spain and the Hang Ten Shares will be issued to those shareholders under the Scheme. However, the Hang Ten Shares are not offered in Spain by means of a public offer as defined and construed by Spanish law nor have they been notified to or registered by the Comisión Nacional del Mercado de Valores. The Directors and the Liquidators acknowledge that the Hang Ten Shares may not be offered or sold in Spain by means of a public offer as defined and construed by Spanish law but may be offered or sold in Spain in compliance with the requirements of Law 24/1988, of 28 July (as amended by Law 37/1998, of 16 November), on the Spanish Securities Market and the Royal Decree 291/1992, of 27 March (as amended by Royal Decree 2590/1998 of 7 December), on issues and public offers for the sale of securities.

Ð 12 Ð SUMMARY OF THE PROPOSAL

This section aims to provide you with an overall summary of the Proposal. This summary does not contain all the information required for you to make an informed decision about the Proposal and it should be read in conjunction with the rest of this document which describes the Proposal in more detail. Some of the particular risks relating to the Hang Ten (BVI) Group and the retail industry are set out in the section headed “Risk Factors” which should be read carefully before you make any decision about the Proposal.

BACKGROUND

Appointment of Liquidators

On 13 January 2000, the Petitioning Creditors filed a winding up petition in Hong Kong. On 23 August 2000, the Hong Kong Court ordered that Akai be wound-up and appointed the Official Receiver as provisional liquidator of Akai pursuant to section 194 (1)(a) of the Companies Ordinance pending the first meeting of Creditors. On 24 May 2001, the Liquidators were appointed as the joint and several liquidators of Akai by the Hong Kong Court.

On 28 August 2000, the Petitioning Creditors filed a winding-up petition in Bermuda. On that same day, the Bermuda Court appointed R. Craig Christensen as provisional liquidator and, on 1 September, 2000, the Bermuda Court appointed Fan Wai Kuen, Joseph and Damien Hodgkinson, together with R. Craig Christensen, as joint and several provisional liquidators of Akai pursuant to section 170(2) of the Companies Act pending a first meeting of Creditors. On 29 September 2000, the Bermuda Court ordered that Akai be wound up. On 16 March 2001, the Liquidators were appointed as the joint and several liquidators of Akai by the Bermuda Court.

Progress of Liquidation

Following their appointment, the Liquidators took into their custody the limited number of assets, books and records of the Akai Group which were identifiable and made available to them. Due to the inadequate information and funds available to the Liquidators, their investigations of the Akai Group have been and continue to be severely restricted. Consequently, as at the Latest Practicable Date, the return to Creditors, if any, from the proceeds of the realisation of the Akai Group’s assets is not known. As at the Latest Practicable Date, the Liquidators have received proofs of debt with claims in aggregate in the amount of HK$9,855,359,252, in respect of the winding-up in Hong Kong and HK$8,975,675,776 in respect of the winding-up in Bermuda. However, the Liquidators have not yet completed their adjudication of the Claims.

At present, there are few tangible assets under the control of the Liquidators. However, if the Proposal is successfully implemented, there will be gross realisations of HK$12,000,000 in cash and the proceeds of sale of the Creditors’ Share Allocation which will be the first material realisations in the winding-up of Akai. A number of legal claims against various parties have been identified by the Liquidators. As at the Latest Practicable Date, it is not known whether these claims are worth pursuing as there are insufficient funds available to the Liquidators to undertake the necessary investigations or to obtain legal advice.

Given the lack of funds and limited information available to the Liquidators, as at the Latest Practicable Date, the Liquidators are unable to estimate with any degree of certainty what, if any, realisations may be available from the winding-up of Akai apart from the realisations achieved if the Proposal is successfully implemented. Ð 13 Ð SUMMARY OF THE PROPOSAL

Role of Liquidator

The role of a liquidator is to collect and realise the assets of a company. The proceeds from the realisation of a company’s assets are applied in discharging all of the company’s debts and liabilities after paying the costs and expenses of the winding-up. Any balance that remains is distributed among the company’s shareholders according to their rights and interests or otherwise dealt with as the company’s memorandum of association and bye-laws direct.

De-listing Procedure

The Stock Exchange placed Akai in the de-listing procedure set out in Practice Note 17 to the Listing Rules with effect from 23 August 2000.

On 10 September 2001, the Stock Exchange advised Akai that it was in the third stage of the de- listing procedure and that, unless a resumption proposal was submitted to the Stock Exchange by no later than 11 March, 2002, the listing of the Akai Shares on the Stock Exchange would be cancelled.

On 28 February 2002, Akai submitted the Proposal to the Stock Exchange. On 8 March 2002, the Stock Exchange advised Akai that the Listing Committee had approved the extension for the cancellation of the listing of the Akai Shares up to 17 July 2002 to enable the Proposal to be progressed.

On 12 July 2002, the Stock Exchange advised Akai that the Listing Committee had approved the extension for the cancellation of the listing of the Akai Shares up to 29 November 2002 to enable Akai to proceed with the Proposal and the new listing application of Hang Ten under the Proposal.

On 23 October 2002, the Stock Exchange advised Akai that the Listing Committee had approved a further extension for the cancellation of the listing of the Akai Shares up to 22 January 2003 to enable Akai to proceed with the Proposal and the new listing application of Hang Ten under the Proposal.

The extension was granted in respect of the Proposal and not any other resumption proposal. If the Proposal is not successfully implemented, the Stock Exchange is unlikely to grant a further extension regardless of whether or not an alternative resumption proposal is made. If this were to occur, the Akai Shares will be de-listed and the Akai Shares will have no value.

THE PROPOSAL

Summary

In summary, the Proposal is as follows:

(a) Hang Ten will acquire the entire issued share capital of Hang Ten (BVI) from the Investors and the Other Investors in consideration of the Investors’ Securities Allocation and the Other Investors’ Securities Allocation respectively, as a result of which the Investors will hold a controlling interest in Hang Ten.

Ð 14 Ð SUMMARY OF THE PROPOSAL

(b) Under the Scheme, Akai Shareholders on the Final Record Date will transfer all of their Akai Shares to Hang Ten. In consideration of this transfer, Akai Shareholders on the Final Record Date will receive in aggregate 300,000,000 Hang Ten Shares, credited as fully paid up, to be distributed among Akai Shareholders pro rata in accordance with their respective holdings of Akai Shares (subject to rounding down) held on the Final Record Date.

(i) pay to Akai cash consideration of HK$12,000,000, financed by the net proceeds to be derived from the subscription of new shares in Hang Ten (BVI) by the Other Investors; and

(ii) issue and allot the Creditors’ Share Allocation to Akai, being 2,100,000,000 Hang Ten Shares, credited as fully paid up, and ranking pari passu with all other Hang Ten Shares in issue on the Closing Date.

(d) Listing of the Akai Shares will be withdrawn from the Stock Exchange and the Hang Ten Shares will be listed on the Stock Exchange by way of Introduction.

(e) On the Closing Date, Hang Ten will transfer all of the Akai Shares to the Liquidators (or their nominees) for the sum of HK$1.00.

(f) If there is any surplus available for Akai Shareholders after the discharge of the costs and expenses of the winding-up of Akai and the payment in full of the Claims of the Creditors, such surplus will be held on trust by the Scheme Trustee for the Akai Shareholders.

(g) The Investors have agreed that Hang Ten will pay costs and expenses incurred by Akai of implementing the Proposal including the costs and expenses of the Liquidators and their advisers not exceeding HK$6,450,000, being the estimated costs and expenses of implementing the Proposal on the basis of quotations received from the relevant professional advisers. According to the Liquidators and in accordance with the Restructuring Agreement, of the HK$6,450,000 to date, HK$1,250,000 has been paid by the Investors to the Liquidators. Although it is likely that the costs incurred to date exceed this amount, the costs and expenses incurred by Akai of implementing the Proposal are limited to HK$6,450,000 under the Restructuring Agreement. On Closing, amounts paid by Hang Ten in respect of such costs will be treated as part of the Scheme Fund. In the event that costs and expenses of implementing the Proposal (including those incurred by the Liquidators) exceed HK$6,450,000, the additional amount will be borne as an expense in relation to the liquidation of Akai and be payable from the proceeds generated therein.

Acquisition of Hang Ten (BVI) by Hang Ten

Ð 15 Ð SUMMARY OF THE PROPOSAL issued on the Closing Date. A total of 4,402,000,000 Hang Ten Shares will be issued on exercise of the Warrants, representing approximately 18.03% of the issued ordinary share capital of Hang Ten immediately after such Warrants are issued. Out of the 21,200,000,000 Hang Ten Shares, the Investors will direct Hang Ten to issue and allot 1,200,000,000 Hang Ten Shares (with associated Warrants) to the Designated Person in consideration of consultancy services provided by the Designated Person to the Investors in relation to the restructuring of Akai.

In order to maintain sufficient public float upon the listing of the Hang Ten Shares, the Other Investors have agreed to convert the 269 CPS into 2,690,000,000 Hang Ten Shares upon Closing but before the commencement of dealing in the Hang Ten Shares. Accordingly, there will be 3,500 million Hang Ten Shares held by the Other Investors upon listing of the Hang Ten Shares, representing approximately 12.92% of the issued ordinary share capital of Hang Ten following Closing but before any conversion of the CPS issued to the Investors or exercise of the Warrants.

Completion of the Sale and Purchase Agreement will take place on or before the Closing Date.

Conditions Precedent to the Proposal

Closing is conditional on each of the following conditions being satisfied prior to the Long Stop Date:

(a) The passing of all necessary resolutions by the Akai Shareholders (other than (a) the Investors or any persons acting in concert with them, who are not permitted to vote pursuant to the Code and (b), the directors, chief executive and any controlling shareholder of Akai or their respective associates pursuant to Rule 6.12 of the Listing Rules) approving the implementation of the Proposal to be proposed at the Special General Meeting.

(b) The approval of the Creditors’ Schemes by a majority in number representing not less than three-fourths in value of the Creditors present and voting in person or by proxy at the Creditors’ Scheme Meetings, the sanction by the Courts of the Creditors’ Schemes and delivery of office copies of the orders of the Hong Kong Court and the Bermuda Court to the Registrar of Companies in Hong Kong and the Registrar of Companies in Bermuda respectively for registration.

Ð 16 Ð SUMMARY OF THE PROPOSAL

(c) The approval of the Scheme by a majority in number representing not less than three-fourths in value of Akai Shareholders at the Voting Record Date present and voting in person or by proxy at the Scheme Meeting, the sanction by the Bermuda Court of the Scheme and the delivery of an office copy of the order of the Bermuda Court to the Registrar of Companies in Bermuda.

(d) In addition, Rule 2.10 of the Code provides that the Scheme may only be implemented if:

(i) the Scheme is approved by at least 75% of the votes attaching to the disinterested Akai Shares that are cast either in person or by proxy at the Special General Meeting by way of a poll; and

(ii) the number of votes cast against the resolution to approve the Scheme at the Special General Meeting is not more than 10% of the votes attaching to all disinterested Akai Shares.

(e) Approval by the Listing Committee of the Stock Exchange of the withdrawal of the listing of the Akai Shares.

(f) Approval by the Listing Committee of the Stock Exchange to the granting of the listing of and permission to deal in the Hang Ten Shares in issue and to be issued pursuant to the Restructuring Documents.

(g) Appropriate approval from the SFC relating to the Proposal.

(h) Approval by all relevant authorities for the issue of the Hang Ten Shares pursuant to the Proposal.

(i) Consents and approvals of all relevant government and regulatory authorities and any other Persons necessary for the implementation of the Proposal including, without limitation, the approval (referred to in (d) above) required under Rule 2.10 of the Code, the written confirmation by the Hong Kong Securities Clearing Company Limited that the share capital of Hang Ten has been accepted as eligible securities for deposit, clearance and settlement in CCASS.

(j) Duly executed Warrant Instrument.

(k) The Sale and Purchase Agreement being duly executed, the completion of which is conditional only on the issue of the Closing Notice.

The conditions listed at (a) to (k) above must be satisfied (to the extent not amended or waived in writing by the Liquidators and the Investors) before Closing in order for the Proposal to be successfully implemented.

Ð 17 Ð SUMMARY OF THE PROPOSAL

The Creditors’ Schemes have been approved by the requisite majority in number and value of the Creditors at the Creditors’ Scheme Meetings held on 26 September 2002 and on 25 October 2002 the Bermuda Court made an order sanctioning the Creditors’ Scheme proposed under section 99 of the Companies Act. The Sale and Purchase Agreement was executed by the parties thereto on 28 October 2002. Save as mentioned, all other conditions listed above remained outstanding as at the Latest Practicable Date. The Liquidators and the Investors will not waive any of the conditions (including the condition listed in (c) above) the fulfilment of which is required by the Code, the Listing Rules or other applicable laws in order for the Scheme to be successfully implemented.

If each of the conditions listed above is satisfied, it is anticipated that the Effective Date for the Schemes will be on or before 4 December 2002 and the Closing Date for the implementation for the Proposal will be on 5 December 2002. If any of the conditions precedent listed above have not been fulfilled by 31 December 2002, the Proposal will lapse unless a later date is agreed among the parties to the Restructuring Agreement.

Akai Shareholders will be notified by an announcement placed in one English language newspaper and one Chinese newspaper circulated in Hong Kong and one English newspaper circulated in Bermuda of the Closing Date or that the Proposal has lapsed.

Should the Proposal fail, the Akai Shares will be delisted in accordance with Practice Note 17 of the Listing Rules. Should this occur, the Liquidators believe that there will be no return to the Akai Shareholders.

Ð 18 Ð SUMMARY OF THE PROPOSAL

Shareholding Structure of Hang Ten

The Proposal contemplates the following shareholding structure of Hang Ten upon Closing, conversion of the CPS and exercise of the Warrants.

Upon Closing Upon Closing Upon Closing with no CPS issued to with all CPS with all CPS the Investors issued to the Investors issued to the Investors converted converted but before converted and Before Closing or Warrants exercised exercise of the Warrants all Warrants exercised Number of Number of Number of Number of Akai Shares Hang Ten Shares Hang Ten Shares Hang Ten Shares (million shares) % (million shares) % (million shares) % (million shares) %

THE INVESTORS The Kung Family (Notes 1 &3) Asian Wide Ð Ð 12,600 46.49% 56,940 58.41% 59,460.00 58.36% Mr. Kenneth Hung Ð Ð 800 2.94% 3,620 3.71% 3,780.00 3.71% Mr. Dennis Kung Ð Ð 400 1.48% 1,810 1.86% 1,890.00 1.86% Ms. Peggy Hung Ð Ð 400 1.48% 1,810 1.86% 1,890.00 1.86% Ms. Pamela Hung Ð Ð 400 1.48% 1,810 1.86% 1,890.00 1.86%

YGM (Note 3) Ð Ð 5,000 18.45% 22,590 23.18% 23,590.00 23.15%

Ms. Kao (director of Hang Ten) (Note 3) Ð Ð 200 0.74% 900 0.92% 940.00 0.92% Ms. Wang (director of Hang Ten) (Note 3) Ð Ð 200 0.74% 900 0.92% 940.00 0.92%

Sub-total Ð Ð 20,000 73.80% 90,380 92.72% 94,380.00 92.64%

OTHER INVESTORS (Notes 2 & 3) Best Standand Ð Ð 1,993 7.36% 1,993 2.05% 2,085.60 2.06% Raytop Ð Ð 1,507 5.56% 1,507 1.54% 1,576.40 1.54%

DESIGNATED PERSON (Note 3) Ð Ð 1,200 4.43% 1,200 1.23% 1,440.00 1.41%

AKAI SHAREHOLDERS 2,191 100.00% 300 1.10% 300 0.31% 300.00 0.29%

LIQUIDATORS (for the benefit of the Creditors) Ð Ð 2,100 7.75% 2,100 2.15% 2,100.00 2.06%

Sub-total 2,191 100.00% 7,100 26.20% 7,100 7.28% 7,502.00 7.36%

Total 2,191 100.00% 27,100 100.00% 97,480 100.00% 101,882.00 100.00%

Ð 19 Ð SUMMARY OF THE PROPOSAL

Upon Closing Upon Closing Upon Closing with no CPS issued to with all CPS issued to with all CPS issued to the Investors the Investors converted the Investors converted converted but before and all Warrants Before Closing or Warrants exercised exercise of Warrants exercised Number of Number of Number of Number of Akai Shares Hang Ten Shares Hang Ten Shares Hang Ten Shares (million shares) % (million shares) % (million shares) % (million shares) %

The concert group The Investors (Note 3) Ð Ð 20,000 73.80% 90,380 92.72% 94,380 92.64% Other Investors (Note 3) Ð Ð 3,500 12.92% 3,500 3.59% 3,662 3.60% Designated Person (Note 3) Ð Ð 1,200 4.43% 1,200 1.23% 1,440 1.41%

Sub-total Ð Ð 24,700 91.15% 95,080 97.54% 99,482 97.65%

Akai Shareholders 2,191 100.00% 300 1.10% 300 0.31% 300 0.29%

Liquidators (for the benefit of the Creditors) Ð Ð 2,100 7.75% 2,100 2.15% 2,100 2.06%

Total 2,191 100.00% 27,100 100.00% 97,480 100.00% 101,882 100.00%

Note 1: Out of the 14,600 million Hang Ten Shares issued to members of the Kung Family upon Closing but before conversion of the CPS held by the Investors or exercise of the Warrants, Mr. Kenneth Hung, Mr. Dennis Kung, Ms. Peggy Hung, Ms. Pamela Hung and Asian Wide will be interested in 800 million, 400 million, 400 million, 400 million and 12,600 million Hang Ten Shares respectively.

Note 2: In order to maintain sufficient public float upon the listing of the Hang Ten Shares, the Other Investors have agreed to convert the 269 CPS to be issued to them under the Sale and Purchase Agreement into Hang Ten Shares upon Closing but before the commencement of dealing in Hang Ten Shares. Accordingly, there will be 27,100 million Hang Ten Shares and 7,038 CPS issued and credited as fully paid upon listing of the Hang Ten Shares.

Note 3: The Investors, the Other Investors and the Designated Person are concert parties pursuant to the Code and together hold approximately 91.15% of the issued ordinary share capital of Hang Ten upon Closing with no CPS issued to the Investors converted or Warrants exercised.

As shown from the first shareholding table above, the Investors will be interested in approximately 73.80% of the entire issued ordinary share capital of Hang Ten upon Closing. The remaining 26.20% of the issued ordinary share capital of Hang Ten will collectively be held by the Akai Shareholders, the Liquidators, the Designated Person and Other Investors. The Designated Person and the Other Investors are all not connected with the directors, the chief executives and the substantial shareholders of Hang Ten and its subsidiaries and their respective associates. Accordingly, not less than 25% of Hang Ten’s issued ordinary share capital will be held by the public immediately upon commencement of dealings in the Hang Ten Shares and prior to the conversion of any CPS held by the Investors or exercise of any Warrants in compliance with the public float requirements stipulated under Rule 8.08 of the Listing

Ð 20 Ð SUMMARY OF THE PROPOSAL

Rules. It will be a term of the issued Warrants and CPS that no holders thereof shall be entitled to exercise the conversion right if such conversion would result in the public float falling below the minimum prescribed percentage required under the Listing Rules.

The Stock Exchange has stated that in the event that less than 25% of the issued Hang Ten Shares are in public hands after Closing or if the Stock Exchange believes that:

¥ a false market exists or may exist in the trading of the Hang Ten Shares; or

¥ there are insufficient Hang Ten Shares in public hands to maintain an orderly market,

it will consider exercising its discretion to suspend dealings in the Hang Ten Shares.

The Stock Exchange has further stated that, if Hang Ten remains listed on the Stock Exchange, any asset dispositions or asset acquisitions by Hang Ten and its subsidiaries will be subject to the relevant provisions of the Listing Rules. The Stock Exchange has the discretion to require Hang Ten to issue an announcement and/or a circular to the shareholders of Hang Ten irrespective of the size of the proposed transaction, particularly when such proposed transaction represents a departure from the principal activities of the Hang Ten Group. The Stock Exchange also has the power to aggregate a series of transactions and any such transaction(s) may result in Hang Ten being treated as if it were a new listing applicant.

INFORMATION ON THE HANG TEN GROUP

Hang Ten was incorporated in Bermuda on 17 July 2002 and, on completion of the Sale and Purchase Agreement, will be an investment holding company whose principal asset is its interest in the entire issued share capital of Hang Ten (BVI). Hang Ten (BVI) was incorporated in the British Virgin Islands and is an investment holding company whose principal asset is its 97.01% equity interest in ILC.

RISK FACTORS

In considering the Proposal, Akai Shareholders and the Creditors should also take into account the risk factors relating to the Hang Ten Group contained in the section headed “Risk Factors” set out on pages 25 to 30 of this document. Ð 21 Ð PARTIES INVOLVED IN THE PROPOSAL

Sponsor Kim Eng Capital (Hong Kong) Limited Room 1901, 19th Floor Bank of America Tower 12 Harcourt Road Central Hong Kong

Co-sponsor Asian Capital (Corporate Finance) Limited Suite 3104, 31st Floor Nine Queen’s Road Central Central Hong Kong

Independent financial adviser to Horwath Capital Asia Limited Akai Shareholders 601 Dah Sing Financial Centre 108 Gloucester Road Wanchai Hong Kong

Legal advisers to the Liquidators Allen & Overy 9th Floor Three Exchange Square Central Hong Kong

Legal advisers to Hang Ten as to Hong Kong Law Preston Gates Ellis 10th Floor Hutchison House 10 Harcourt Road Central Hong Kong

as to Bermuda Law Conyers Dill & Pearman 2801 One Exchange Square 8 Connaught Place Central Hong Kong

Auditors and reporting accountants KPMG 8th Floor, Prince’s Building 10 Chater Road Central Hong Kong

Property valuer Chesterton Petty Ltd 16th Floor CITIC Tower 1 Tim Mei Avenue Central Hong Kong

Ð 22 Ð EXPECTED TIMETABLE

Expected timetable (Note 1)

2002

Voting Record Date ...... 23 November

Latest time to lodge forms of proxy in respect of the: Scheme Meeting (Note 2) ...... 10:00 a.m. on 23 November Special General Meeting (Note 3) ...... 10:30 a.m. on 23 November

Scheme Meeting ...... 10:00 a.m. on 25 November

Special General Meeting (or as soon as the Scheme Meeting has been concluded or adjourned) ...... 10:30 a.m. on 25 November

Announcement of the results of the Scheme Meeting and the Special General Meeting ...... 26 November

Bermuda Court hearing of petition to sanction the Scheme (Note 1) ...... 29 November

Final Record Date (Note 4) ...... 3 December

Effective Date (Notes 1 and 5) ...... 4 December

Closing Date ...... 5 December

Despatch of certificates for Hang Ten Shares (Note 6) ...... 5 December

Listing of Akai Shares withdrawn from the Stock Exchange at the close of business ...... 6 December

First day of dealing in Hang Ten Shares on the Stock Exchange ...... 9 December

First day of operation of odd lot trading facility (Note 7) ...... 9 December

2003

Last day of operation of odd lot trading facility (Note 7) ...... 8 January

Ð 23 Ð EXPECTED TIMETABLE

Notes:

1. The dates listed in the expected timetable are subject to the Courts’ availability and may change.

2. Akai Shareholders are requested to lodge the yellow form of proxy for the Scheme Meeting and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority at the principal place of business of Akai at 7th Floor, Allied Kajima Building, 138 Gloucester Road, Wanchai, Hong Kong by the time stated above. Completion and return of the yellow form of proxy will not preclude an Akai Shareholder from attending the Scheme Meeting and voting in person at the meeting. In such event, his yellow form of proxy will be deemed to have been revoked.

3. The blue form of proxy for the Special General Meeting and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority should be lodged at the principal place of business of Akai at 7th Floor, Allied Kajima Building, 138 Gloucester Road, Wanchai, Hong Kong by the time stated above. Completion and return of the blue form of proxy will not preclude an Akai Shareholder from attending the Special General Meeting and voting in person. In such event, his blue form of proxy will be deemed to have been revoked.

4. Under the Scheme, the Final Record Date, being the time for determining the entitlements under the Scheme, is fixed at the Business Day immediately preceding the Effective Date. A press announcement will be placed in one English newspaper and one Chinese newspaper circulating in Hong Kong and one newspaper circulating in Bermuda if circumstances arise which may result in any of the times or dates in the expected timetable being different from that indicated above.

5. The Schemes will become effective when an office copy of the Bermuda Court order sanctioning the Scheme and the Creditors’ Scheme (with or without modification) is delivered to the Registrar of Companies in Bermuda for registration and an office copy of the order of the Hong Kong Court sanctioning the Creditors’ Scheme (with or without modification) is delivered to the Registrar of Companies in Hong Kong for registration. This is expected to take place on or about 4 December 2002 but is subject to the availability of the Bermuda Court to hear the petition to sanction the Scheme.

6. Assuming that the Scheme becomes effective, as from the Effective Date, all existing certificates representing Akai Shares will cease to have effect as evidence of ownership of the Akai Shares represented by such certificates. In the absence of any specific instructions to the contrary received in writing by the relevant Person(s) entitled to receive Hang Ten Shares under the Scheme, certificates representing the Hang Ten Shares will be distributed pursuant to the Scheme to the Persons entitled thereto at their respective registered addresses as set out in the register of members of Akai or, in the case of joint holders, to the registered address of that joint holders whose name stands first on the register of members of Akai in respect of the joint holding. All such certificates will be sent at the risk of the Persons to whom they are addressed.

7. For the purpose of alleviating difficulties that may arise for Akai Shareholders who will be holding odd lots of Hang Ten Shares, Hang Ten has appointed Kim Eng Securities (Hong Kong) Limited to match the sale and purchase of odd lots of Hang Ten Shares during the one month period from the first day of operation of the odd lot trading facility to the last day of the odd lot trading facility, both days inclusive. Any Person wishing to take advantage of the odd lot trading facility should contact Ms. Amy Wu (Telephone: 2532 8229) or Ms. Sandy Yuen (Telephone: 2532 8226) during this period. Any Person holding Hang Ten Shares in odd lots should note that the matching of sale and purchase of odd lots of the Hang Ten Shares is not guaranteed and should consult their professional advisers if they are in any doubt about the odd lot trading facility. For more details please refer to the paragraph headed “Arrangements for odd lot trading” in the Explanatory Statement on page 118 of this document.

Ð 24 Ð RISK FACTORS

In evaluating the business of the Hang Ten Group, Akai Shareholders should consider carefully all the information contained in this document including the risk factors summarised below.

Risks relating to the Hang Ten Group

Reliance on the Taiwan retail market

For each of the years ended 31 March 2000, 2001 and 2002, sales of the Hang Ten (BVI) Group derived from the Taiwan market amounted to US$134,483,000, US$131,315,000 and US$112,260,000 respectively, representing approximately 92.67%, 89.98% and 70.45% respectively of the Hang Ten (BVI) Group’s total turnover. In the event of any adverse change in the Taiwan economy or consumer behaviour, the business performance and the profitability of the Hang Ten Group may be adversely affected.

Seasonality

The Hang Ten (BVI) Group experiences seasonal fluctuations in its revenues and operating income and generally records higher sales revenue during holiday seasons, such as Christmas and Chinese New Year. As a result, the sales strategy of the Hang Ten (BVI) Group is to launch two principal series of casual wear in a year, namely a spring/summer series and a winter series. This strategy may be adjusted taking into consideration the weather of each market in each year. Any substantial change in temperatures in the markets where the Hang Ten Group operates during the peak seasons may have a material impact on the Hang Ten Group’s turnover and profitability.

Non-renewal of leases or increase in rental

All of the retail shops (except for one in Taipei) operated by the Hang Ten (BVI) Group are leased at market rent. Operating lease rental charges of the Hang Ten (BVI) Group for the retail shops for each of the years ended 31 March 2000, 2001 and 2002 amounted to approximately US$19,180,000, US$21,068,000 and US$20,718,000 respectively, representing approximately 13.22%, 14.44% and 13.00% of the Hang Ten (BVI) Group’s total turnover respectively. On the expiry of such leases, the Hang Ten (BVI) Group is required to negotiate with the relevant lessors the renewal and terms thereof. There is no assurance that any such leases will be renewed upon their expiry or on terms and conditions that will be acceptable to the Hang Ten Group. If such leases cannot be renewed or are renewed with unfavourable terms, the Hang Ten Group may need to relocate some of its retail outlets to new alternative premises and its operation and profitability may be adversely affected.

High gearing position

At the close of business on 31 August 2002, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this document, the Hang Ten (BVI) Group had outstanding borrowings totalling approximately US$40.0 million. These borrowings comprise unsecured bank overdrafts of US$0.4 million, secured bank loans of approximately US$18.9 million, unsecured bank loans of approximately US$3.8 million, unsecured loans advanced by the Investors of US$16.4 million and unsecured loans advanced by a minority shareholder of a subsidiary of US$0.5 million. The relatively higher gearing position of the Hang Ten (BVI) Group was mainly a result of the completion of the

Ð 25 Ð RISK FACTORS acquisition of ILC in December 2001. The acquisition of ILC by Hang Ten (BVI) was partly financed by bank loans and shareholders’ loans of US$17.6 million and US$20 million respectively. Accordingly, finance costs of the Hang Ten (BVI) Group for the year ended 31 March 2002 included interest payable on these loans for the period from 1 January 2002 to 31 March 2002. If the acquisition of ILC had been completed on 1 April 1999 and the loans had been in existence throughout the relevant period, finance costs for each of the three years ended 31 March 2002 would have increased by approximately US$1.9 million, US$1.9 million, and US$1.4 million respectively on assumption that the prevailing interest rates during the period from 1 January 2002 to 31 March 2002 are also applicable to the prior periods. Given that (a) the total outstanding borrowings of the Hang Ten (BVI) Group totalled approximately US$40.0 million as at 31 August 2002, representing about 47.6% of the audited total assets of the Hang Ten (BVI) Group as at 31 March 2002 and (b) the Hang Ten (BVI) Group’s gearing ratio, which is represented by the interest-bearing borrowings as a percentage of the Hang Ten (BVI) Group’s total assets as at 31 March 2002, amounted to approximately 57.9%, there may be an adverse impact on the Hang Ten Group’s future cashflow and earnings should the Hang Ten Group be unable to repay the loans and/or any interests incurred when due.

Reliance on shareholders’ loans

As at the Latest Practicable Date, aggregate principal amounts of US$12.3 million and US$4.1 million were owed by Hang Ten (BVI) under the shareholders’ loans granted to it by members of the Kung Family and YGM respectively. The purpose of the shareholders’ loans was to facilitate the acquisition by Hang Ten (BVI) of ILC in December 2001, details of which are set out under the section headed “Financial Information” in the Letter from the Board of Directors of Hang Ten Group Holdings Limited. Pursuant to the terms of the shareholder’s loan agreements, these shareholders’ loans are unsecured and repayable by Hang Ten (BVI) in one lump sum on 8 November 2011 or earlier if an event of default occurs under these agreements. The loans bear interest at the rate of 6% per annum payable yearly in arrears unless Hang Ten (BVI) elects to capitalise such interest in which event it will form part of the principal amount of the loans and will bear interest at the same rate.

Save for the aforesaid shareholders’ loans and as at the Latest Practicable Date, the Hang Ten (BVI) Group had aggregate banking facilities of US$36.75 million, of which US$23.1 million had been utilized. Given that the shareholders’ loans accounted for about 41.2% of the Hang Ten (BVI) Group’s total indebtedness as at 31 March 2002, it should be noted that the Hang Ten (BVI) Group relies heavily on the financial support of the Kung Family and YGM. In the event that an event of default occurs under the agreements for the granting of these shareholders’ loans and the Hang Ten (BVI) Group is required to repay the shareholders’ loans immediately, the working capital level and the financial position of the Hang Ten (BVI) Group may be adversely affected.

Tax contingency

In 1997, ILC, a subsidiary of Hang Ten (BVI), entered into a two-year service agreement with the Taiwan branch of another subsidiary, Hang Ten Enterprises Ltd. (the “Branch”). Pursuant to the agreement, ILC provided decoration design service to retail stores operated by the Branch as well as sales promotion support service to the Branch. The service fees amounted to US$3,200,000 for each of the two years ended 31 March 1998 and 1999. In accordance with the Income Tax Law (the “Law”) of Taiwan, the service fees are subject to 20% withholding tax. However, the withholding tax rate may be reduced to 3.75% under Article 25 of the Law subject to approval of the Taiwan Tax Authority. As at the Latest Ð 26 Ð RISK FACTORS

Practicable Date, the application filed by ILC with the Tax Authority for a reduction of the withholding tax rate to 3.75% had not yet been approved. If the application is not successful, ILC will be liable to pay an additional withholding tax of approximately US$1,040,000. No provision for this amount has been made as the Directors consider it highly likely that the Taiwan Tax Authority will approve the application, on the basis of the success of similar applications previously made by ILC. In the event that the Taiwan Tax Authority rejected the application filed by ILC and ILC is required to pay the additional withholding tax, the working capital level and the financial position of the Hang Ten (BVI) Group may be adversely affected.

Reliance on key management

The Hang Ten (BVI) Group’s success is, to a significant extent, attributable to the management skill, experience and expertise of the directors and its senior management. There may be an adverse impact on the Hang Ten Group’s operations and profitability in the event that the directors and senior management of the Hang Ten (BVI) Group cease to be involved in the Hang Ten Group’s management.

Further details of the service agreements entered into between the Hang Ten Group and the Directors are set out in the paragraph headed “Particulars of service contracts” in Appendix VII of the document.

Non-inclusion of a profit forecast for the year ending 31 March 2003

A profit forecast for the year ending 31 March 2003 has not been included in this document since it is not possible to predict with certainty the turnover and profitability of the Hang Ten Group. During each of the years ended 31 March 2000, 2001 and 2002, the Hang Ten (BVI) Group derived approximately 90.5%, 89.8% and 93.6% respectively of its total turnover from its retail operation. Hence, the business of the Hang Ten (BVI) Group is considered to be “retail” in nature, without long-term contracts or firm orders. The Directors do not consider that it is appropriate to prepare a profit forecast for the Hang Ten Group for the year ending 31 March 2003. Investors should be aware that there is no assurance that the Hang Ten Group can maintain or increase its levels of revenue or profitability and that the historical results of the Hang Ten (BVI) Group should not, therefore, be used as an indication of the future performance of the Hang Ten Group.

Dividend policy

For each of the years ended 31 March 2000 and 2001, the Hang Ten (BVI) Group paid dividends in the amounts of approximately US$7,021,000 and US$28,038,000 respectively, representing approximately 64.2% and 258% of the profit attributable to shareholders for the respective periods. No dividend was declared and paid for the year ended 31 March 2002. The payment of these dividends was financed by internal resources and bank borrowings of the Hang Ten (BVI) Group. Potential investors should note that the above dividend payments should not be used as a reference for Hang Ten’s future dividend policy.

Reliance on major suppliers

The Hang Ten (BVI) Group does not have its own production facilities and relies on a number of Taiwan and Hong Kong suppliers to manufacture “Hang Ten” branded products. For each of the three

Ð 27 Ð RISK FACTORS years ended 31 March 2002, the largest supplier of the Hang Ten (BVI) Group accounted for approximately 38%, 38% and 27% respectively of Hang Ten (BVI) Group’s total purchases. For each of the same periods, the five largest suppliers accounted for approximately 64%, 66% and 61% respectively of the Hang Ten (BVI) Group’s total purchases. There is no guarantee that the Hang Ten (BVI) Group’s suppliers will continue to conduct business with the Hang Ten (BVI) Group in the future. Should these major suppliers cease to conduct business with the Hang Ten (BVI) Group and the Hang Ten (BVI) Group fails to find replacement suppliers for the supply of its products on competitive terms, profitability of the Hang Ten (BVI) Group may be adversely affected.

Legality and validity of all leases and sub-leases for the leased properties of Hang Ten (BVI) Group

The Hang Ten (BVI) Group has over 300 leased properties situated in various jurisdictions outside Hong Kong, primarily representing shops and department store counters operated by it for the distribution of its products. Given the nature of its business, these shops and counters are opened and closed on a recurring basis in the ordinary and usual course of business of the Hang Ten (BVI) Group and the composition of its leased properties at any one time is subject to frequent changes. Accordingly, it would not be feasible to obtain confirmation of the legality and validity of all the leases and sub-leases currently subsisting for the leased properties of the Hang Ten (BVI) Group. In the event that there are any material defects in title to all or a significant portion of its leased properties and the relevant outlets of the Hang Ten (BVI) Group are unable to move to alternative locations for business, the operations and hence profitability of the Hang Ten (BVI) Group may be adversely affected.

As part of the due diligence process, a sample of leased properties based on their respective volume of business, turnover, profitability, locations and countries has been selected and reviewed. Further details in respect of the due diligence results are set out under the section headed “Leased Properties” in the “Letter from the Board of Directors of Hang Ten Group Holdings Limited” in this document.

The Investors have confirmed that they will provide an indemnity to Hang Ten to compensate any losses suffered by the relevant subsidiaries of Hang Ten as tenants in the event that any of them were unable to enjoy continued use of the leased properties in accordance with the subsisting lease agreements owing directly to the reasons described in paragraphs (a) to (c) under the section headed “Leased Properties” referred to above and the relevant member of the Hang Ten Group were unable to secure alternative locations for its operations on terms that it considers to be reasonably acceptable. In the event that there are any material losses suffered by the relevant subsidiaries of Hang Ten as tenants and the Investors are unable to fulfil their respective obligations pursuant to the said indemnity, the operations of the Hang Ten Group may be adversely affected.

Risks relating to the industry of the Hang Ten Group

Competition

The Directors do not consider that there are any significant barriers of entry into the business of retailing and wholesaling of casual wear. The Directors consider that all companies engaged in the retailing and wholesaling of casual wear and complementary accessories are, at varying degrees, competitors of the Hang Ten Group. To the extent that competitors become more successful with respect to key competitive factors such as brand name recognition, product range, product quality, costing, pricing and services, the Hang Ten Group’s future growth and profitability may be adversely affected.

Ð 28 Ð RISK FACTORS

Trademark protection

The Hang Ten (BVI) Group has registered its “Hang Ten” trademarks and service marks in numerous countries worldwide. Further details of the intellectual property rights of the Hang Ten (BVI) Group are set out in the paragraph headed “Intellectual property rights” in the section headed “Further information about the business” in Appendix VII to this document.

The Directors are not aware of any infringement of the Hang Ten (BVI) Group’s trademarks and service marks in the past. However, the Hang Ten Group’s image and profitability may be adversely affected if there is any infringement of its trademarks and service marks in the future.

Fashion and apparel industry risks

The Directors believe that the success of the Hang Ten (BVI) Group depends substantially on its ability to create and define product and fashion trends as well as to anticipate, gauge and react to changing consumer behaviour and demands in a timely manner. There can be no assurance that the Hang Ten Group will continue to be successful in this regard.

The industry in which the Hang Ten (BVI) Group operates is cyclical. Purchases of apparel and related merchandise tend to decline during recession periods. There can be no assurance that the Hang Ten Group will be able to maintain the historical growth of the Hang Ten (BVI) Group in revenues or earnings, or remain profitable in the future. Further, a recession in the general economy of Taiwan or uncertainties regarding future political and economic prospects of Taiwan could affect consumer spending habits and could have an adverse effect on the results of the Hang Ten Group’s operations.

Risks relating to the Taiwan market

Economic condition of Taiwan

The New Taiwan Dollar has experienced considerable volatility and depreciation as a result of economic turmoil in Asia. During the period between 1 April 1997 and 30 September 2000, the exchange rate of New Taiwan Dollars against the U.S. dollars depreciated substantially, partly because of the Asian economic crisis and partly because of the overall economic performance of Taiwan. Continued volatility and depreciation of the New Taiwan dollars may have a material effect on the business and profitability of the Hang Ten Group in future.

Earthquake

Taiwan is susceptible to earthquakes. In September 1999 and March 2002, Taiwan experienced severe earthquakes which caused serious damages to infrastructure and losses of life, particularly in the central part of Taiwan. Such earthquakes resulted in material disruptions to power supply in many areas, damages to buildings and infrastructure were widely recorded and many rural areas were isolated as highways and roads were completely demolished. Although the Hang Ten (BVI) Group currently has no production facilities in Taiwan, earthquakes could indirectly result in a decline in the demand for its products and could change the consumption pattern of the target customers of the Hang Ten Group. Earthquakes could also lead to economic downturn, which could affect the retail business as a whole.

Ð 29 Ð RISK FACTORS

Accordingly, in the event that a major earthquake occurs in Taiwan in the future, it may severely disrupt the normal operations of business and could have a material adverse impact on the business and profitability of the Hang Ten Group.

Political consideration

The Republic of China has a unique international political status. Both the Republic of China and the PRC assert sovereignty over all of China, including Taiwan. The PRC government does not recognise the legitimacy of the Republic of China government. Although significant economic and cultural relations have been established in recent years between the Republic of China and the PRC, relations have often been strained and the PRC government has indicated that it does not rule out the use of military force to gain control over Taiwan in some circumstances, such as the declaration of independence by the Republic of China. Relations between the Republic of China and the PRC have been particularly strained in recent years. Following the results of the presidential elections for the Republic of China held in March 2000, the new President of the Republic of China was sworn in on 20 May 2000. Past developments in relations between the Republic of China and the PRC have on occasion depressed the economic performance of Taiwan. Relations between the Republic of China and the PRC and other factors affecting the political, social or economic stability in Taiwan could have a material adverse impact on the financial condition and operations of the Hang Ten Group, as well as the market price and the liquidity of the Hang Ten Shares.

Risks relating to the South Korean market

The Korean Won has experienced considerable volatility and depreciation as a result of the economic turmoil in Asia in 1997. During the period between 1997 and 1998, the exchange rate of the Korean Won against the U.S. dollar depreciated substantially, partly because of the Asian economic crisis and partly because of the overall economic performance of South Korea. Continuing volatility of the Korean Won may have a material effect on the business and profitability of the Hang Ten Group in the future.

South Korea has experienced intense political tensions including the reunification issue between North and South Korea, low export demand, decrease in manufacturing output and consumer demand have contributed to a decline in the South Korean economy since the economic turmoil in Asia in 1997. The resistance of South Korea’s huge conglomerates against restructuring demands by the International Monetary Fund has placed greater pressure on the South Korean government to take forceful action. The South Korean government has proposed a program of fiscal and monetary expansion that could implement the reforms demanded by the International Monetary Fund and other international lenders. It could have a material adverse effect on the economy and hence operations of the Hang Ten Group if the reforms proposed by the South Korean government could not be successfully implemented.

Ð 30 Ð DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Name Address Nationality

Executive Directors

Chan Wing Sun 12B Bowen Road British Hong Kong

Hung, Kenneth Unit E, 12th Floor Chinese Tower 8, Island Resort 28 Siu Sai Wan Road Chai Wan Hong Kong

Wang Li Wen 87 Jungyang 3rd Street Taiwanese Shindian Taipei Taiwan

Kao Yu Chu Unit 1, 8th Floor Taiwanese 458 Guangfu South Road Shinyi Taipei Taiwan

Independent non-executive directors

Kwong Chi Keung Block A, 3rd Floor Chinese No. 22, Fontana Gardens Tai Hang Road Causeway Bay Hong Kong

So Hon Cheung Stephen 1st Floor, Flat B Canadian Sunny Villa 69 Blue Pool Road Happy Valley Hong Kong

Audit committee

Kwong Chi Keung Block A, 3rd Floor Chinese No. 22, Fontana Gardens Tai Hang Road Causeway Bay Hong Kong

So Hon Cheung Stephen 1st Floor, Flat B Canadian Sunny Villa 69 Blue Pool Road Happy Valley Hong Kong

Ð 31 Ð CORPORATE INFORMATION RELATING TO HANG TEN GROUP HOLDINGS LIMITED

Registered office Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Principal place of business in Taiwan International Commercial Building 8th Floor, No. 23, Sec 1 Chang An E. Road Taipei Taiwan

Principal place of business in Hong Kong Room 107, 1st Floor St. George’s Building 2 Ice House Street Central, Hong Kong

Company secretary Lam Wai Ho, Stephen, HKSA, CPA (Aust.), who will be appointed as the secretary of Hang Ten upon the listing of the Hang Ten Shares on the Stock Exchange

Ira Stuart Outerbridge III, FCIS, who will resign as secretary of Hang Ten upon the listing of the Hang Ten Shares on the Stock Exchange and will thereafter be appointed as assistant secretary of Hang Ten

Authorised representatives Chan Wing Sun Kenneth Hung

Principal banker The Hongkong and Shanghai Banking Corporation Limited Main Office 1 Queen’s Road Central Hong Kong

The Hongkong and Shanghai Banking Corporation Limited Taipei Branch 13th Floor, No. 333 Section 1 Keelung Road Taipei Taiwan

Chang Hwa Commercial Bank Limited No. 23, Section 1 Chang An East Road Taipei Taiwan

Ð 32 Ð CORPORATE INFORMATION RELATING TO HANG TEN GROUP HOLDINGS LIMITED

Hua Nan Commercial Bank Limited No. 18, Section 1 Chang An East Road Taipei Taiwan

Bank of Taiwan No. 150, Section 1 Chung Shan North Road Taipei Taiwan

First National Bank of San Diego P.O. Box 85625 San Diego California US

Principal share registrar The Bank of Bermuda Limited Bank of Bermuda Building 6 Front Street Hamilton HM 11 Bermuda

Branch share registrar Standard Registrars Limited 5th Floor Wing On Centre 111 Connaught Road Central Hong Kong

Ð 33 Ð INDUSTRY OVERVIEW

INDUSTRY OVERVIEW

The consumer product retail industry is generally affected by the general state of the economy and the purchasing power of the population. In nearly every major emerging market in the world, the retailing industry faces severe challenges. These include economic recession in the short term, increased economic competition from the world’s largest emerging market in the long term, increasing regulation of foreign investment, increasing restrictions on large store development, and increasing saturation by modern retail formats.

TAIWAN MARKET

Overview of Taiwan economy

Taiwan has a dynamic capitalist economy with gradually decreasing regulation of investment and foreign trade by government authorities. Real growth in GDP has averaged about 8.5% a year during the past three decades. The compound annual growth rate of the GDP and the per capita GDP over the period from 1994 to 2000 were approximately 7% and approximately 6.3% respectively. Taiwan’s GDP per person in 2000 was approximately HK$100,278 and was almost half of that of Hong Kong for the corresponding year. Also, positive growth GDP and the per capita GDP were recorded for the year of 1998 and 1999 in Taiwan while there were downturns elsewhere in Asia during the same period.

The following table shows the total GDP, retail sales in Taiwan and retail sales as a percentage of GDP in Taiwan during the period from 1996 to 2001:

1996 1997 1998 1999 2000 2001

GDP (NT$ billion) 7,678 8,329 8,939 9,290 9,663 9,542 Per capita GDP (NT$) 357,599 384,126 408,715 421,621 435,992 434,954 Retail sales (NT$ billion) 233 254 274 299 313 305 Retail sales as a percentage of GDP (%) 3.03 3.05 3.07 3.22 3.24 3.20

Sources: National Statistics of Taiwan, the Republic of China (September 2002)

SOUTH KOREA MARKET

Overview of South Korean economy

The Asian financial crisis of 1997 to 1999 exposed certain longstanding weaknesses in South Korea’s development model, including high debt/equity ratios, massive foreign borrowing, and an undisciplined financial sector. By 1999, the growth in GDP of South Korea had recovered, reversing the substantial decline of 1998. The GDP and the per capita GDP of South Korea in 2001 were approximately US$471,135 million and approximately US$9,841 respectively, representing a growth of 3% and 0.9% respectively compared to 2000. The South Korean Government has pressed the country’s largest business groups to restructure and to strengthen their financial base. It is expected that the growth in GDP in 2002 will be at a more sustainable rate.

Ð 34 Ð INDUSTRY OVERVIEW

The following table shows the total GDP, retail sales in South Korea and retail sales as a percentage of GDP in South Korea during the period from 1996 to 2001:

Note 1996 1997 1998 1999 2000 2001

Retail sales (W$ million) 1 84,490,000 89,231,000 84,220,000 93,300,000 102,040,000 109,428,470 Retail sales (US$ million) 2 105,028 93,800 60,095 78,481 90,224 91,010 GDP (W$ million) 3 418,479,000 453,276,000 444,366,000 482,744,000 517,097,000 589,532,580 GDP (US$ million) 4 520,205 476,486 317,078 406,070 457,220 471,135 Population (‘000) 5 45,769 46,211 46,644 47,074 47,437 47,874 GDP per capita (W$ million) 9,143,285 9,808,833 9,526,756 10,255,003 10,900,710 12,314,253 GDP per capita 11,366 10,311 6,798 8,626 9,638 9,841 Retail sales as a percentage of GDP (%) 20.19 19.69 18.95 19.33 19.73 19.32

SINGAPORE MARKET

Overview of Singaporean economy

The Singaporean economy was hit by the Asian financial crisis that started with the devaluation of the Thai Baht in July 1997. Although Singapore’s financial and economic fundamentals were sound, the rapidly deteriorating external environment in Asia generally affected Singapore adversely due to its close links with regional economies. The Singaporean economy contracted 0.1% in 1998, after achieving 8.5% growth in 1997. After recovery in 1999 and 2000, Singapore was hit by another recession in 2001 and its economy fell by 2%, down from 10% growth in 2000. The GDP and the per capita GDP of Singapore in 2001 were approximately S$153,455 million and approximately S$37,433 respectively.

The following table shows the total GDP, retail sales in Singapore and retail sales as a percentage of GDP in Singapore during the period from 1997 to 2001:

Note 1997 1998 1999 2000 2001

GDP (S$ million) 6 140,279 137,618 140,070 159,888 153,455 Per capita GDP (S$) 6 39,394 37,193 36,323 40,051 37,433 Retail sales (S$ million) 1 17,340 15,500 16,380 17,130 18,472 Retail sales (US$ million) 2 11,716 9,261 9,664 9,936 10,460 Retail sales as a percentage of GDP (%) 12.36 11.26 11.69 10.71 12.04

Ð 35 Ð INDUSTRY OVERVIEW

THE PHILIPPINES MARKET

Overview of the economy of the Philippines

The economy of the Philippines had a strong performance in 2001 despite generally weak global conditions and challenges in the domestic front, including a political transition and concerns about the peace and order situation. The peso remained broadly stable even though it experienced depreciation pressures in 2001 due to domestic and external factors. Stronger macroeconomic fundamentals, including lower inflation, a generally improved fiscal position, and a more flexible exchange rate which increased the room for policy manoeuvre and resilience to external shocks. Moreover, the sustained implementation of structural reforms enabled the government of the Philippines to continue laying solid foundations for broad-based economic growth.

The following table shows the total GDP, retail sales in the Philippines and retail sales as a percentage of GDP in the Philippines during the period from 1996 to 2001:

Note 1996 1997 1998 1999 2000 2001

Retail sales (P$ million) 1 932,000 1,037,700 1,015,400 1,188,500 1,364,701 1,929,405 Retail sales (US$ million) 2 35,545 35,212 24,831 30,405 30,881 38,855 GDP (P$ million) 3 2,171,920 2,426,740 2,665,060 2,976,900 3,302,590 3,612,181 GDP (US$ million) 4 82,834 82,346 65,172 76,157 74,732 83,105 Population (’000) 5 70,742 72,335 73,927 75,522 76,823 78,330 GDP per capita (P$ million) 30,702 33,549 36,050 39,418 42,990 46,115 GDP per capita (US$ million) 1,171 1,138 882 1,008 973 1,061 Retail sales as a percentage of GDP (%) 42.91 42.76 38.10 39.92 41.32 46.75

Notes:

(1) sources from database of euromonitor 2002

(2) sources from Euromonitor Ð International Marketing Data and Statistics 2002, page 404

(3) sources from Euromonitor Ð International Marketing Data and Statistics 2002, page 165

(4) sources from Euromonitor Ð International Marketing Data and Statistics 2002, page 177

(5) sources from Euromonitor Ð International Marketing Data and Statistics 2002, page 99

(6) The Singapore Department of Statistics Ð GDP at current market prices (updated 1 March 2002)

Ð 36 Ð INDUSTRY OVERVIEW

THE CLOTHING INDUSTRY

Casual wear will continue to dominate the product scene in the clothing market as the pursuit of a leisurely lifestyle becomes increasingly popular worldwide. Consumer expectations for the shopping experience are getting increasingly higher. In part, this is because today’s customers demand more from the shopping experience such as service, convenience, information, quality, innovation, and enjoyment.

Increasingly, consumers are less willing to compromise. If they cannot find a specific item at one store, they will move onto the next store rather than settle for something that is not exactly what they want. At the same time, consumers are also more likely to be loyal to companies that make an effort to get to know what their needs and tastes are.

Ð 37 Ð LETTER FROM THE JOINT AND SEVERAL LIQUIDATORS OF AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION)

AKAI HOLDINGS LIMITED (In Compulsory Liquidation) (incorporated in Bermuda with limited liability)

The Liquidators: Registered Office: Nicholas Timothy Cornforth Hill Clarendon House Fan, Wai Kuen Joseph 2 Church Street R. Craig Christensen Hamilton HM 11 Bermuda

Principal Place of Business: 7th Floor Allied Kajima Building 138 Gloucester Road Wanchai Hong Kong

31 October 2002

To Akai Shareholders

Dear Sir/Madam,

PROPOSAL FOR AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) BY WAY OF A SHAREHOLDERS’ SCHEME OF ARRANGEMENT PURSUANT TO SECTION 99 OF THE COMPANIES ACT AND WITHDRAWAL OF THE LISTING OF THE SHARES OF AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND THE LISTING OF THE ORDINARY SHARES OF HANG TEN GROUP HOLDINGS LIMITED ON THE STOCK EXCHANGE OF HONG KONG LIMITED BY WAY OF INTRODUCTION

On 23 August 2000, the Hong Kong Court ordered that Akai be wound-up and appointed the Official Receiver as provisional liquidator of Akai pursuant to section 194(1)(a) of the Companies Ordinance, pending a first meeting of Creditors. On 24 May 2001, the Liquidators were appointed as the joint and several liquidators of Akai by the Hong Kong Court.

On 28 August 2000 and 1 September 2000, the Bermuda Court appointed Fan Wai Kuen, Joseph, R. Craig Christensen and Damien Hodgkinson as joint and several provisional liquidators of Akai pursuant to section 170(2) of the Companies Act, pending a first meeting of Creditors. On 29 September 2000, the Bermuda Court ordered that Akai be wound up. On 16 March 2001, the Liquidators were appointed as the joint and several liquidators of Akai by the Bermuda Court.

On 23rd August 2000 (the date of the winding-up order of the Hong Kong Court), all the powers of Akai’s directors ceased and Akai ceased to carry on business.

Ð 38 Ð LETTER FROM THE JOINT AND SEVERAL LIQUIDATORS OF AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION)

Trading in Akai Shares on the Stock Exchange has been suspended since 23 August 2000, being the date the Hong Kong Court ordered Akai to be wound up. The Stock Exchange followed the delisting procedure set out in Practice Note 17 of the Listing Rules and, on 10 September 2001, Akai was placed into the third stage of the delisting procedure. The Stock Exchange imposed a six (6) month period from 11 September 2001 to 11 March 2002 for Akai to submit a resumption proposal. If a resumption proposal had not been submitted within that time the listing of the Akai Shares would have been cancelled.

On 28 February 2002, Akai submitted the Proposal to the Stock Exchange and requested an extension for the cancellation of the listing of the Akai Shares. On 8 March 2002, the Stock Exchange gave in- principle approval to the Proposal and advised Akai that the Listing Committee had approved the extension for the cancellation of the listing of the Akai Shares up to 17 July 2002, to enable the Proposal to be progressed.

On 10 July 2002, Akai applied to the Stock Exchange for an extension of the deadline for the cancellation of the listing of the Akai Shares. On 12 July 2002, the Stock Exchange advised that the Listing Committee had approved the extension for the cancellation of the listing of the Akai Shares up to 29 November 2002.

The listing of the Akai Shares on the Stock Exchange has an intrinsic value that is capable of being realised. The realisation of value from the listing of a company’s shares on the Stock Exchange is different to other assets realised in an insolvent winding-up in that shareholders of an insolvent company can obtain a benefit from their co-operation in the realisation of value from the listed status of a company’s shares through a scheme of arrangement that facilitates a listing of another company’s shares by way of Introduction.

On the basis that the Stock Exchange will only consider the Proposal, the value of the listed status of the Akai Shares can only be realised if you vote in favour of the Scheme. This document sets out the transactions which will enable you to obtain a benefit from your co-operation in the realisation of the value ascribed to the listed status of the Akai Shares by the Investors.

The Scheme is set out at pages 353 to 362 of this document. It should be read together with the Explanatory Statement set out at pages 102 to 119 of this document and the additional information on the Akai Group set out at Appendix V to this document. The notices of the Scheme Meeting and the Special General Meeting are set out in pages 366 to 368 of this document.

Ð 39 Ð LETTER FROM THE JOINT AND SEVERAL LIQUIDATORS OF AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION)

A letter from the board of directors of Hang Ten is set out on pages 42 to 90 of this document and financial and other information on the Hang Ten Group is set out in Appendices II to IV and Appendix VII to this document.

Horwath has been appointed as the independent financial adviser to the Akai Shareholders in connection with the Proposal. The opinions and recommendations of Horwath are set out in its letter on pages 91 to 101 of this document.

It is our opinion that:

(a) it is highly unlikely that Akai Shareholders will receive a distribution in Akai’s winding-up;

(b) the Stock Exchange will not consider an alternative resumption proposal; and

(c) the successful implementation of the Proposal will not affect the rights of Creditors and Akai Shareholders to make Claims in the winding-up of Akai.

It is our view that the successful implementation of the Proposal is in the best interests of Akai Shareholders as it represents their only realistic prospect of realising any value from their Akai Shares.

Action to be taken

The meetings of Akai Shareholders have been convened in connection with the implementation of the Proposal.

(a) The Scheme Meeting

The Scheme Meeting has been convened at the direction of the Bermuda Court for the purposes of considering and, if thought fit, approving (with or without modification) the Scheme. The formal notice of the Scheme Meeting is set out on pages 366 and 367 of this document.

The Executive has determined that Rule 2.10 of the Code applies to the Proposal and thus, except with the consent of the Executive, the Scheme may only be implemented if:

(i) the Scheme is approved by at least 75% of the votes attaching to the disinterested Akai Shares that are cast either in person or by proxy at the Special General Meeting by way of a poll; and

(ii) the number of votes cast against the resolution to approve the Scheme at the Special General Meeting is not more than 10% of the votes attaching to all disinterested Akai Shares.

Ð 40 Ð LETTER FROM THE JOINT AND SEVERAL LIQUIDATORS OF AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION)

(b) Special General Meeting

The Special General Meeting has been convened for the purpose of considering and, if thought fit, passing the resolutions approving the implementation of Proposal.

The formal notice of the Special General Meeting is set out on page 368 of this document.

The Scheme Meeting will be held at 10:00 a.m. on 25 November 2002 at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wan Chai, Hong Kong. The Special General Meeting will be held at 10:30 a.m. on 25 November 2002 or as soon as the Scheme Meeting has been conducted or adjourned. The Investors or any persons acting in concert with them are not permitted to vote at the Special General Meeting pursuant to the Code and the directors, chief executive and any controlling shareholder of Akai or their respective associates are not permitted to vote at the Special General Meeting pursuant to Rule 6.12 of the Listing Rules.

Enclosed with this document are:

(i) a yellow form of proxy for use at the Scheme Meeting; and

(ii) a blue form of proxy for use at the Special General Meeting.

Whether or not you intend to attend the relevant meetings in person, please complete and return the proxy forms as soon as possible and, in any event, not less than 48 hours before the time appointed for the relevant meetings. Completed proxy forms should be returned to the principal place of business of Akai at 7th Floor, Allied Kajima Building, 138 Gloucester Road, Wanchai, Hong Kong. Proxy forms for the relevant meeting may be handed to the Chairman of the meeting.

Completion and return of forms of proxy will not preclude you from attending the relevant meetings and voting in person should you so wish. In that event your form of proxy will be deemed to have been revoked in respect of any meeting which you attend.

Yours faithfully For and on behalf of Akai Holdings Limited (In Compulsory Liquidation) Nicholas Timothy Cornforth Hill Fan Wai Kuen Joseph R. Craig Christensen Joint and Several Liquidators

Ð 41 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

HANG TEN GROUP HOLDINGS LIMITED (incorporated in Bermuda with limited liability)

Executive Directors: Registered Office: Chan Wing Sun Clarendon House Kenneth Hung 2 Church Street Wang Li Wen Hamilton HM 11 Kao Yu Chu Bermuda

Independent non-executive Directors: Principal place of business in Taiwan: Kwong Chi Keung International Commercial Building So Hon Cheung, Stephen 8th Floor, No 23, Sec 1 Chang An E. Road Taipei Taiwan

Principal place of business in Hong Kong: Room 107, 1st Floor St. George’s Building 2 Ice House Street Central, Hong Kong

31 October 2002

To Akai Shareholders

Dear Sir or Madam,

Listing of Hang Ten Group Holdings Limited by way of Introduction

INTRODUCTION

On 16 April 2002, the Investors entered into the Restructuring Agreement with, amongst others, Akai and the Liquidators (as supplemented by an agreement dated 14 May 2002) in respect of the Proposal. The principal terms of the Restructuring Agreement are set out in the Explanatory Statement set out on pages 102 to 119 of this document.

Upon completion of the Proposal, the entire issued share capital of Akai will be transferred to the Liquidators for the benefit of the Creditors. All Akai Shareholders will become shareholders of Hang Ten, the sole asset of which will be the Hang Ten (BVI) Group.

Ð 42 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

The purpose of this letter is to provide you with additional information on the Hang Ten Group and the future intention of the Hang Ten Group after completion of the Proposal.

Your attention is drawn to the “Letter from the joint and several Liquidators of Akai Holdings Limited” set out on pages 38 to 41 of this document, the “Explanatory Statement” set out on pages 102 to 119 of this document and the “Letter from Horwath” set out on pages 91 to 101 of this document.

INFORMATION ON HANG TEN

Hang Ten was incorporated in Bermuda on 17 July 2002 and, on completion of the Sale and Purchase Agreement, will be an investment holding company whose principal asset is its interest in the entire issued share capital of Hang Ten (BVI). Hang Ten (BVI) was incorporated on 10 September 2001 in the British Virgin Islands and is an investment holding company whose principal asset is its 97.01% equity interest in ILC.

The Hang Ten (BVI) Group is principally engaged in the business of designing, marketing and sale of apparel and accessories under the brandname of “Hang Ten” in Asian countries including Taiwan, South Korea, Singapore, Philippines and Malaysia. The portfolio of the apparel under the brandname of “Hang Ten” comprises jackets, vests, T-shirts, skirts, pants and jeans as well as other accessories such as bags, caps, socks, shoes, belts and umbrellas, which are targeted at customers aged between 15 and 45. The Directors believe that “Hang Ten” is one of the leading brand names for money-for-value apparel and accessories in the Asian region. The Hang Ten (BVI) Group is the owner of the trademark “Hang Ten” which is also licensed to independent third parties for distribution and production of apparel and accessories in over 50 countries, including the US, Europe, Japan, Australia, South America and South Africa. The Hang Ten (BVI) Group operates a retail network of over 300 outlets in the Asian region. The Hang Ten (BVI) Group is also engaged in the wholesaling of products bearing the brandname “Hang Ten” through a number of authorised local distributors in Taiwan. The Directors believe that there will be no change in the nature of the business of the Hang Ten (BVI) Group upon the listing of the Hang Ten Shares.

Ð 43 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

CORPORATE STRUCTURE

The following chart illustrates the corporate structure, places of incorporation/establishment and the main business activities of members of the Hang Ten Group immediately after the issue of Hang Ten Shares to the Investors and the Other Investors and conversion of the 269 CPS issued to the Other Investors upon Closing but before any issue of Hang Ten Shares to the Akai Shareholders, the Liquidators (for the benefit of the Creditors) and the Designated Person or any conversion of the CPS issued to the Investors or exercise of the Warrants:

YGM The Kung Family Other Investors Ms. Wang and Ms. Kao

21.28% 62.13% 14.89% 1.70%

Hang Ten (Bermuda: investment holding)

100%

Hang Ten (BVI) Independent third party (BVI: investment holding)

97.01% 2.99%

ILC (BVI: investment holding)

100% 100% 100% 100% 92% 100% 100% 100% 100%

International Hang Ten (Phils) HTIL Holdings Licensing Yangtze Hang Ten Enterprises Hang Ten Enterprises Hang Ten Korea Hang Ten Enterprises ILC Trademark Holdings Corporation (California) Corp (Taiwan: Taiwan Limited (PTE) Ltd. Corp. (M) Sdn Bhd Corporation Corporation N.V. (Netherlands (US: License retailing and (BVI: Overseas (Singapore: Singapore (Korea: Korea (Malaysia: Malaysia (BVI: Trademark (BVI: Investment Antilles: management property holdings) franchising) retailing) retailing) retailing) ownership) holding) Investment holding) and sub-license for US territory)

100% 100% 55% 100% 100%

Hang Ten Enterprises ILC (Cyprus) Limited. HTIL Corporation, Limited (Cyprus: Investment B.V. (Taiwan branch) Chinaway Trading Hang Ten Phils., Corp holding) (Netherlands: (Taiwan: Taiwan Co., Ltd. (Philippines: Trademark licensing) domestic retailing (BVI: Trading of Philippines retailing 100% and wholesaling apparels) and wholesaling) and overseas wholesaling) ILC Hungary Limited (Hungary: Trademark licensing)

Ð 44 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

The following chart illustrates the corporate structure, places of incorporation/establishment and the main business activities of members of the Hang Ten Group immediately following Closing and listing of the Hang Ten Shares on the Stock Exchange by way of Introduction but before any conversion of the CPS issued to the Investors or exercise of the Warrants:

Liquidators (for the Ms. Wang Akai Shareholders YGM The Kung Family Other Investors Designated Person benefit of the Creditors) and Ms. Kao

1.10% 18.45% 53.87% 7.75% 12.92% 4.43% 1.48%

Hang Ten (Bermuda: investment holding)

100%

Hang Ten (BVI) Independent third party (BVI: investment holding)

97.01% 2.99%

ILC (BVI: investment holding)

100% 100% 100% 100% 92% 100% 100% 100% 100%

International Hang Ten (Phils) HTIL Holdings Yangtze Hang Ten Enterprises Hang Ten Enterprises Hang Ten Korea Hang Ten Enterprises ILC Trademark Licensing Holdings Corporation (Taiwan: Taiwan Limited (PTE) Ltd. Corp. (M) Sdn Bhd Corporation (California) Corp Corporation N.V. (Netherlands retailing and (BVI: Overseas (Singapore: Singapore (Korea: Korea (Malaysia: Malaysia (BVI: Trademark (US: License (BVI: Investment Antilles: property holdings) franchising) retailing) retailing) retailing) ownership) management holding) Investment holding) and sub-license for US territory)

100% 100% 55% 100% 100%

ILC (Cyprus) Limited. HTIL Corporation, Hang Ten Enterprises (Cyprus: Investment B.V. Limited holding) (Netherlands: (Taiwan branch) Chinaway Trading Hang Ten Phils., Corp Trademark (Taiwan: Taiwan Co., Ltd. (Philippines: licensing) domestic retailing (BVI: Trading of Philippines retailing 100% and wholesaling apparels) and wholesaling) and overseas ILC Hungary Limited. wholesaling) (Hungary: Trademark licensing)

Ð 45 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

HISTORY AND DEVELOPMENT OF THE HANG TEN (BVI) GROUP

Symbolised by a pair of bare feet, the brandname “Hang Ten” originated in the 1960s in Southern California, US. At that time, the merchandise marketed under the brandname “Hang Ten” comprised primarily basic, quality apparel based on an American lifestyle image. Given its well-established brandname in the US, in 1991, a licence from Hang Ten International, an independent third party, was obtained to use the trademark “Hang Ten” in Taiwan and Mr. Dennis Kung and YGM established Yangtze to commence the business of marketing and selling apparel under the brandname “Hang Ten” in Taiwan and focused on men’s casual wear.

In 1993, the number of retail shops operated by Yangtze reached 100 and the products of Yangtze diversified into women’s casual wear, kid’s casual wear and accessories.

In 1994, ILC was established as a holding company of Yangtze and was beneficially owned as to 68% and 32% by YGM and Mr. Dennis Kung respectively.

In 1995, Hang Ten Enterprises Limited, a wholly-owned subsidiary of ILC, established a branch office in Taiwan to take over the retailing operations which was previously carried out by Yangtze.

Recognising the potential of the “Hang Ten” brandname, ILC Group, in February 1996, acquired from Hang Ten International, an independent third party, for a cash consideration of approximately US$13 million, the “Hang Ten” trademark in the territories of Taiwan, Hong Kong, the PRC, Singapore, Malaysia and Indonesia (the “Territories”). In the same year, ILC Group was also granted a master licence to use the “Hang Ten” trademark for the rest of the world other than the Territories. In 1996, following the introduction of two independent strategic investors, namely Citicorp Capital Asia Limited and China Investment & Development Company Limited, ILC was owned as to approximately 63.92%, 30.08% and 6% by YGM, the Kung Family and the two strategic investors respectively.

Given its strong established presence in the Taiwan retail apparel industry, ILC Group began to expand their retail business outside Taiwan. In October 1996, Hang Ten Phils., Corp, a 55% owned subsidiary of ILC, operated its first retail outlet in the Philippines through a franchise arrangement. Portraying itself as a mid-to low price American lifestyle clothing retailer, the Directors believe that “Hang Ten” has become one of the popular apparel brands in the Philippines. In November 1999, Hang Ten Enterprises (PTE) Ltd., a wholly-owned subsidiary of ILC, set up its first retail outlet in Singapore and within a period of six months, 6 additional retail outlets had been set up there.

In 2000, the Hang Ten (BVI) Group acquired the “Hang Ten” trademark from Hang Ten International, an independent third party, for a cash consideration of US$13.25 million for countries other than the Territories and owned the trademark of “Hang Ten”.

In September 2000, a total of 1,532 new shares of ILC, representing approximately 0.24% of the then enlarged share capital ILC, were issued to Ms. Wang, Ms. Kao, Chen Tzu Kang, Chen Kin No and Chen Lan Ying through exercises of their employee share options.

In February 2001, Hang Ten Korea, a 70% owned subsidiary of ILC, set up its first franchised shop in South Korea. Through a plan of opening franchised shops, the number of retail outlets in South Korea had increased to 88 as at 31 March 2002. Ð 46 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

On 9 November 2001, YGM, Asian Wide, Mr. Dennis Kung, Ms Wang, Ms Kao, Gallant Top Company Limited (a company owned by Asian Wide, Mr. Dennis Kung and Mrs. Hung Cheng Sui Tsen, the wife of Mr. Dennis Kung), Mr. Chen Tzu Kang, Mr. Chen Kin No and Ms. Chen Lan Ying, and another independent third party, namely Citicorp Capital Asia Limited, who together held approximately 97.01% of the issued share capital of ILC, entered into an agreement to sell their respective interests in ILC to Hang Ten (BVI) for a total consideration of approximately US$54.6 million. On 9 November 2001, YGM, the Kung Family, Ms. Wang and Ms. Kao also entered into a subscription agreement with Hang Ten (BVI) pursuant to which YGM, the Kung Family, Ms. Wang and Ms. Kao agreed to subscribe for and Hang Ten (BVI) agreed to issue 250,000, 729,999, 10,000 and 10,000 new shares of US$0.1 each respectively in the share capital of Hang Ten (BVI) at US$17 per share for a total subscription price of US$16,999,983 (approximately HK$132,599,867).

Upon completion of the reorganisation on 31 December 2001, (a) Hang Ten (BVI) held 97.01% of the issued share capital of ILC and became its holding company while the remaining 2.99% of the issued share capital of ILC is owned by China Investment & Development Company Limited, a strategic investor who is an independent third party not connected with any of the directors, chief executive, substantial shareholders of Hang Ten or any of its subsidiaries or their respective associates; and (b) Hang Ten (BVI) was owned as to approximately 73% by the Kung Family, 25% by YGM and 2% by Ms. Wang and Ms. Kao collectively. The acquisition of ILC and issue of shares to the Investors by Hang Ten (BVI) in December 2001 are not included in the section headed “Corporate reorganisation” in Appendix VII of this document since, at the time these transactions were entered into, the Introduction was not in contemplation. As such, these transactions were not implemented as part of the reorganisation of the Hang Ten (BVI) Group for the purpose of facilitating the listing of the Hang Ten Shares.

In August 2002, Hang Ten Enterprises (M) Sdn Bhd, a wholly-owned subsidiary of ILC, set up its retail outlet in Malaysia.

On 28 October 2002, Hang Ten entered into the Sale and Purchase Agreement under which it will acquire the entire issued share capital of Hang Ten (BVI) from the Investors and the Other Investors.

The consideration payable to the Investors will be satisfied by 21,200,000,000 Hang Ten Shares (with one Warrant for every five Hang Ten Shares) and 7,038 CPS to the Investors. The Warrants will be Ð 47 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED issued on the Closing Date. A total of 4,402 million Hang Ten Shares will be issued on exercise of the Warrants, representing approximately 18.03% of the issued ordinary share capital of Hang Ten at the time such Warrants are issued. Out of the 21,200,000,000 Hang Ten Shares, the Investors will direct Hang Ten to issue and allot 1,200,000,000 Hang Ten Shares (with associated Warrants) to the Designated Person in consideration of consultancy services provided by the Designated Person to the Investors in relation to the restructuring of Akai.

In order to maintain a sufficient public float for the Hang Ten Shares upon Closing, Hang Ten (BVI) will, prior to completion of the Sale and Purchase Agreement, issue shares, representing approximately 3.7% of its enlarged issued share capital, to the Other Investors, who are not connected with the directors, the chief executives and the substantial shareholders of Hang Ten and its subsidiaries or their respective associates. Pursuant to the Sale and Purchase Agreement, the Other Investors will transfer their portion of the entire equity interests in Hang Ten (BVI) to Hang Ten, and to satisfy the consideration to the Other Investors, Hang Ten will issue 810,000,000 Hang Ten Shares (with one Warrant for every 5 Hang Ten Shares so issued) and 269 CPS to the Other Investors. Such Hang Ten Shares will represent approximately 3.32% of the issued ordinary share capital of Hang Ten on the Closing Date but before any conversion of the CPS or exercise of the Warrants. In order to maintain sufficient public float upon the listing of the Hang Ten Shares, the Other Investors have agreed to convert the 269 CPS into 2,690,000,000 Hang Ten Shares upon Closing but before the commencement of dealing in Hang Ten Shares. Accordingly, there will be 3,500 million Hang Ten Shares held by the Other Investors upon listing of the Hang Ten Shares, which will represent approximately 12.92% of the issued ordinary share capital of Hang Ten immediately following such conversion but before any other conversion of the CPS issued to the Investors or exercise of the Warrants.

Further details of the corporate reorganisation of the Hang Ten Group are set out in the paragraph headed “Corporate reorganisation” in Appendix VII to this document.

BUSINESS

Retail business

With its headquarters in Taiwan, the Hang Ten (BVI) Group operated a total of 140 and 19 self- operated retail shops in Taiwan and Singapore respectively as at 31 March 2002. The products bearing the brandname of “Hang Ten” are principally sold through its self operated retail shops. The Directors believe that the Hang Ten (BVI) Group is one of the leading casual wear retail chain operators in the Asian region in terms of the number of retail shops operated by it.

With the increasing demand for casual wear products, the Hang Ten (BVI) Group identified the need to strengthen its retail distribution capability by forming business alliances with department stores. With an objective of attracting a broader customer base, the Hang Ten (BVI) Group also sells “Hang Ten” branded products through sales counters in department stores in the Asian region. Retail shops and department store counters are directly managed and operated by members of the Hang Ten (BVI) Group. The average floor area of a retail shop and a sales counter is approximately 119.85 sq.m. and 49.74 sq.m. respectively.

The Hang Ten (BVI) Group has entered into franchise arrangements with independent franchisees in Taiwan, South Korea, Philippines and Macau with respect to operations of franchised shops selling products bearing the brandname “Hang Ten”. Under the franchise agreements, the franchisees have undertaken to engage exclusively in the sales and marketing of products bearing the brandname “Hang

Ð 48 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Ten” through all distribution channels which shall be in conformity with the Hang Ten (BVI) Group’s established merchandising and marketing policies. All franchisees can only purchase goods from the Hang Ten (BVI) Group and the title of such goods are retained by the Hang Ten (BVI) Group until goods are sold to ultimate customers of the franchised shops. The Hang Ten (BVI) Group is also required to provide assistance from time to time to its franchisees relating to promotions and advertising campaigns, product and sales training, and other operational aspects with the objective of ensuring consistency of its retailing business in terms of service quality and retail image.

For franchisees in the Philippines, the term of the franchise agreements is generally for a period of up to 8 years. The franchisees are required to purchase goods from the Hang Ten (BVI) Group at the prices set by the Hang Ten (BVI) Group. The franchisees can only sell the goods at the suggested retail prices determined by the Hang Ten (BVI) Group. As part of the Hang Ten (BVI) Group’s advertising policy for franchising arrangement, the franchisees are required to pay to the Hang Ten (BVI) Group a quarterly advertising fee of 2% of the gross sales for the preceding quarter.

The Hang Ten (BVI) Group has also entered into franchise arrangements in Taiwan and South Korea with independent franchisees. The term of the franchise agreements ranges from 2 years to 3 years. Goods are sold to customers at the suggested retail prices determined by the Hang Ten (BVI) Group. The franchisees are entitled to a certain amount of commission representing 28% to 31% of the gross sales made by such franchisees. All payments made by the franchisees are settled in Korean Won or NT$.

As at 31 March 2002, the Hang Ten (BVI) Group has 103 franchised shops comprising 3, 28, 71 and 1 franchised shops in Taiwan, Philippines, South Korea and Macau respectively.

During each of the years ended 31 March 2000, 2001 and 2002, the Hang Ten (BVI) Group’s turnover derived from sales conducted in franchised shops accounted for approximately 5.9%, 6.7% and 18.9%, respectively, of its total turnover.

As part of the brand building policy of the Hang Ten (BVI) Group, the retail shops, sales counters in department stores and franchised shops selling “Hang Ten” products are required to conform with standardised display, layout and decoration with the objective of portraying a consistent brand image to its customers.

Licensing business

ILC Trademark Corporation, a member of the Hang Ten (BVI) Group, is currently the owner of the “Hang Ten” trademark. The Hang Ten (BVI) Group has established an international network of licenses covering a number of major cities in Asia, Australia, the US, South America and Europe. The Hang Ten (BVI) Group has, as at 31 March 2002, granted licences to use the “Hang Ten” trademark to 37 independent licensees in over 15 countries, including the US, Europe, Japan, Australia, South America and South Africa. Under the licensing agreements, the licensees are granted the right to design, manufacture and source products using the “Hang Ten” trademark for terms ranging from 6 months to 12 years. These products include apparel, footwear, fragrances, surfboards, accessories, toys, watches and stationery. The licensees are also required to pay a royalty fee in the range of 2.5% to 6% to the Hang Ten (BVI) Group based on the turnover of the licensees. For each of the three years ended 31 March 2002, the royalty income of the Hang Ten (BVI) Group accounted for about 3.4%, 2.9% and 2.4% of its total turnover. The Directors consider that the licensing operation generates a steady income to the Hang Ten (BVI) Group and helps to build a global brand image of its products.

Ð 49 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Wholesaling business

To enhance the sales of “Hang Ten” branded products in a more cost-effective manner, the Hang Ten (BVI) Group, in addition to its retailing and licensing business, also engages in the wholesaling of “Hang Ten” branded products through the appointment of authorised distributors. These distributors are mainly located in suburban areas so as to capture sales in districts which are away from the major city centres. These local distributors, pursuant to the distribution agreements, are allowed to sell products which are supplied by other third parties but are only permitted to sell the “Hang Ten” branded products at designated locations to avoid direct competition with the local retail outlets and/or franchised shops of the Hang Ten (BVI) Group.

The following table shows a breakdown of the Hang Ten (BVI) Group’s audited turnover by retail, licensing and wholesaling business for each of the three years ended 31 March 2000, 2001 and 2002.

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Retail business: Retail shops 105,666 100,182 91,377 Sales counters in department stores 17,024 21,051 27,690 Franchised shops 8,615 9,787 30,080

131,305 131,020 149,147

Wholesale business 8,877 10,684 6,322 Licensing business 4,937 4,242 3,877

145,119 145,946 159,346

The following table shows a geographical breakdown of the Hang Ten (BVI) Group’s audited turnover for each of the three years ended 31 March 2000, 2001 and 2002.

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Taiwan 134,483 131,315 112,260 Philippines 4,780 4,196 4,582 Singapore 919 3,872 8,471 South Korea Ð 2,321 30,156 Other 4,937 4,242 3,877

145,119 145,946 159,346

Ð 50 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

RETAIL POLICIES

The Directors believe that the Hang Ten (BVI) Group has established a competitive position in the casual wear retail market in the Asian region. The Directors further consider that the Hang Ten (BVI) Group’s accomplishment is a result of the successful implementation of the following business policies:

Value for money

The Directors believe that the Hang Ten (BVI) Group has established a reputation for providing to its customers “value for money” apparel and complementary accessories which are characterised by high quality, fashionable design and competitive pricing.

Product variety

The Hang Ten (BVI) Group offers its customers a wide selection of fashionable casual wear (including unisex apparel in a full range of colours and sizes). In addition to apparel products, the Hang Ten (BVI) Group also offers a variety of matching complementary accessories such as bags, caps, socks, shoes, belts and umbrellas.

Strategically located retail network

It has been the Hang Ten (BVI) Group’s policy to strategically locate its retail outlets at prime sites with high levels of shopping traffic and maximum visibility in order to provide its customers with a clean and easily accessible shopping environment. Decisions to open retail shops are dependent primarily on location, concentration of shoppers and youngsters and the consumption power of the relevant area. The Directors believe that retail network of the Hang Ten (BVI) Group has been established with a prominent presence in the principal shopping areas in each country in which it operates.

Quality customer service

The Directors consider high quality customer service to be a valuable intangible asset to the Hang Ten (BVI) Group’s and a key to its success. On a regular basis, the Hang Ten (BVI) Group conducts training seminars for its sales staff, including those employed under franchise arrangements, on service and product knowledge and updates on the latest fashion trends.

Inventory replenishment system

The Directors recognise the importance of an efficient inventory replenishment system which enables instant response to market demand and product performance and also minimises slow-moving stock. Accordingly, the Hang Ten (BVI) Group has made a significant investment in developing a management information system which incorporates an electronic point-of-sale system connecting all the shops, department stores and franchised shops to closely monitor sales trends and stock levels.

Ð 51 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

PRODUCTS

The Hang Ten (BVI) Group is principally engaged in the business of designing, marketing and selling casual wear, apparel and accessories under the brandname of “Hang Ten” in Asian countries including Taiwan, South Korea, Singapore and Philippines. “Hang Ten” branded products include jackets, vests, T-shirts, skirts, pants and jeans as well as other accessories such as bags, caps, socks, shoes, belts and umbrellas. The target customers of the Hang Ten (BVI) Group are primarily customers aged between 15 and 45 with contemporary attitude in their selection of fashionable casual clothing which is of high quality and offers value for money. The Directors believe that the Hang Ten (BVI) Group is well- positioned in the basic, comfortable and value-for-money casual wear market.

During each of the three years ended 31 March 2002, approximately 90.5%, 89.8% and 93.6% of the turnover of the Hang Ten (BVI) Group were derived from the retail business. As the business model of the Hang Ten (BVI) Group is retail in nature, it is not appropriate to disclose details of the five largest customers in this document.

The Hang Ten (BVI) Group adopted a credit policy that allows (i) licensees to have a credit period of 30 days; (ii) franchisees to have a credit period ranging from 7 to 15 days, after the date of invoice; (iii) department store counters to have a credit period ranging from 30 to 45 days, after the date of invoice to the department stores; and (iv) distributors and wholesalers to have a credit period of within 30 days.

The Hang Ten (BVI) Group’s business of sales of apparels is mainly conducted on a cash basis. Accordingly, provision for bad debt is made on a case by case basis by reviewing end of year balances as to the age and specific circumstances of the debtors. For the licensing business, provision for bad debts is also made on a case by case basis as above. In addition, a general provision of 10% is made in respect of the outstanding royalty receivables at each year end date.

According to the policy of the Hang Ten (BVI) Group, items sold can be replaced within one month. As for the discount policy, no special discount to individual specific customer is allowed. Discounts are generally made during promotion and offered up to approximately 40%.

The breakdown of the audited turnover of the Hang Ten (BVI) Group by products for each of the years ended 31 March 2000, 2001, and 2002 is as follows:

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000 Retail business: Men’s casual wear 85,005 84,508 90,573 Ladies’ causal wear 31,780 32,510 46,288 Kid’s casual wear 6,066 6,268 7,587 Accessories 8,454 7,734 4,699

131,305 131,020 149,147

Wholesale business 8,877 10,684 6,322 Licensing business 4,937 4,242 3,877

145,119 145,946 159,346

Ð 52 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

INVENTORY CONTROL AND CASH CONTROL

Owing to the nature of the Hang Ten (BVI) Group’s businesses, many of the sales generated by the Hang Ten (BVI) Group are settled in cash. The Hang Ten (BVI) Group’s management has set out specific procedures in relation to the custody of cash including segregation of duties and daily reconciliations of cash balances with sales amounts. The staff responsible for handling cash, mainly the cashiers, are required to follow these procedures strictly. Area supervisors and shop supervisors of the Hang Ten (BVI) Group and the Hang Ten (BVI) Group’s senior management are responsible for the supervision of the compliance with these procedures. The Hang Ten (BVI) Group has not experienced any theft from its retail stores during the three years ended 31 March 2002.

Through the generation of accurate and up-to-date inventory records with the assistance of the management information system, management of the Hang Ten (BVI) Group is able to gather information on individual product and shop performance on a regular basis, identify market trends rapidly and replenish products within a short time span so that the Hang Ten (BVI) Group is able to capture the largest possible share of the market while maintaining a consistently low inventory level of approximately 16.5%, 19.5% and 19.6% to total asset value during the years ended 31 March 2000, 2001 and 2002 respectively. The Directors believe that low inventory levels are crucial to the Hang Ten (BVI) Group’s stringent cost control policy since this not only minimises storage space and cost, but also avoids unnecessary lock-up of working capital and reduces the risk of inventory obsolescence, both of which are considered by the Directors as common problems encountered by retailers.

Inventories are stated at lower of cost and net realisable value. Accumulated provision in the amount of approximately US$1,860,000, US$794,000 and US$1,471,000 respectively was made as at 31 March 2000, 2001 and 2002 respectively. The Hang Ten (BVI) Group adopted a provision policy based on the age of the inventories. No provision will be made for current seasons items; a 25% provision will 1 be made for those items aged between /2 to 1 year; a 50% provision will be made for those items aged 1 1 between 1 to 1 /2 years; a 75% provision will be made for those items aged between 1 /2 to 2 years; and a full provision will be made for those items aged over 2 years.

The Hang Ten (BVI) Group carries out an annual inventory-taking at the end of each financial year. The Hang Ten (BVI) Group’s inventory control department is responsible for keeping an up-to-date stock record. Apart from the annual full count stocktake, the Hang Ten (BVI) Group also conducts different types of stocktake such as seasonal stocktake, random stocktake and ad-hoc stocktake. This policy is effective given that the stock loss during the three years ended 31 March 2002 was negligible and mainly related to internal transfer discrepancy among different outlets. The Hang Ten (BVI) Group has not experienced any significant stock loss to its retail stores during the three years ended 31 March 2002.

SUPPLIERS

Since the establishment of the Hang Ten (BVI) Group, all “Hang Ten” branded products are manufactured by a number of Taiwan and Hong Kong suppliers engaged by the Hang Ten (BVI) Group in order to enhance cost effectiveness and flexibility in utilisation of resources by the Hang Ten (BVI)

Ð 53 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Group. The merchandising team has established a purchasing schedule based on the forecast of the volume of sales, the actual sales volume of the previous season and timing for introduction of new products. The merchandising team of the Hang Ten (BVI) Group regularly reviews the purchase orders on hand and inventory levels to place orders to suppliers accordingly and determines the required production schedule to be conducted by its suppliers. The Hang Ten (BVI) Group has about 38 merchandising staff for arranging purchase orders and monitoring the delivery of merchandise. The Hang Ten (BVI) Group has a team of experienced quality control staff closely monitoring the quality of the merchandise manufactured by its suppliers. Commercial production of the Hang Ten (BVI) Group’s products by suppliers will only commence after production samples have been checked by the Hang Ten (BVI) Group as to quality, design and colour. On-site quality inspection is performed at the suppliers’ premises before the merchandise is delivered to the Hang Ten (BVI) Group. The supplier is required to source all raw materials and to manufacture the products in accordance with the Hang Ten (BVI) Group’s design specifications.

The Hang Ten (BVI) Group has about 35 suppliers. Although the Hang Ten (BVI) Group has not entered into any long term agreements with its suppliers, the Hang Ten (BVI) Group maintains a good working relationship with its suppliers. For the three years ended 31 March 2002, the Hang Ten (BVI) Group’s largest supplier accounted for about 38%, 38% and 27%, respectively of the total purchases of the Hang Ten (BVI) Group. For the three years ended 31 March 2002, the Hang Ten (BVI) Group’s five largest suppliers accounted for about 64%, 66% and 61%, respectively of the total purchase of the Hang Ten (BVI) Group. The Hang Ten (BVI) Group has established an amicable business relationship with its principal suppliers for over 10 years. During the three years ended 31 March 2002, the Hang Ten (BVI) Group has not encountered any delay in production by its suppliers and any significant return of goods as a result of unsatisfactory quality of products manufactured by its suppliers. The Directors believe that there are many suppliers in Taiwan, Hong Kong and other countries who can undertake the manufacturing process of the Hang Ten (BVI) Group’s products of similar quality and quantity. As such, the existing suppliers of the Hang Ten (BVI) Group can be easily replaced without causing major disruption to the Hang Ten Group’s business operations. Each of the five largest suppliers of the Hang Ten (BVI) Group is independent of and not connected with any of the directors, chief executive or substantial shareholders of Hang Ten or any of its subsidiaries or their respective associates (as defined under the Listing Rules).

Most of the Hang Ten (BVI) Group’s purchases are settled by letters of credit or on an open account basis with credit terms up to 30 to 45 days. For the year ended 31 March 2002, about 55% of total purchases were settled by letter of credits with a term of 15 days and about 45% of the total purchases were settled on an open account basis with a credit term of up to 30 to 45 days. About 59%, 34%, 3% and 4% of the total purchases for the year ended 31 March 2002 were settled in HK$, NT$, US$ and Korean Won respectively.

DESIGN AND PRODUCTION DEVELOPMENT

All of the products manufactured by the Hang Ten (BVI) Group under its “Hang Ten” brandname are designed by the Hang Ten (BVI) Group’s in-house design team of 13 staff. In order to keep abreast of the latest fashion trends, members of the Hang Ten (BVI) Group’s design team frequently attend the MAGIC International trade show biannually. In general, the Hang Ten (BVI) Group commences its product design process eight months before the next season, during which time the design team carries

Ð 54 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED out research on market trends and conducts reviews on the performance of the previous season. The Hang Ten (BVI) Group’s merchandise design team creates various design concepts or themes featuring the latest fashion trends based on which design sketches are created. The Hang Ten (BVI) Group also performs sales projections for the coming season before new designs are finalised and approved. The Hang Ten (BVI) Group normally designs for two seasons every year: the spring/summer season and autumn/winter season. On average, a total of 450 designs are created for each season for the Hang Ten (BVI) Group’s products bearing the “Hang Ten” brandname.

QUALITY CONTROL

The Directors place strong emphasis on quality control and have adopted stringent quality control procedures and standards.

The Hang Ten (BVI) Group has about 38 merchandising staff whose duties primarily include arranging purchase orders and monitoring the delivery of merchandise. The Hang Ten (BVI) Group has a team of experienced quality control staff closely monitoring the quality of the merchandise manufactured by its suppliers. They regularly visit the suppliers’ manufacturing facilities to ensure their general production capability. Commercial production of the Hang Ten (BVI) Group’s products by suppliers will only commence after production samples have been checked by staff of the Hang Ten (BVI) Group as to quality, design and colour. On-site quality inspection is performed at the suppliers’ premises before the merchandise is delivered to the Hang Ten (BVI) Group.

MARKETING AND PROMOTION

The Hang Ten (BVI) Group recognises the importance of establishing the corporate image of its “Hang Ten” brandname. The Hang Ten (BVI) Group currently employs an experienced advertising team of 43 staff. The Hang Ten (BVI) Group’s major promotion channels are through advertisement on billboards, magazines, newspapers, radio and public buses. The Hang Ten (BVI) Group engages famous entertainment celebrities to promote its products.

The Hang Ten (BVI) Group is also very active in promoting its own brandnames to potential licensees, franchisees and retailers in major trade shows. To promote the image of the “Hang Ten” brand, the Hang Ten (BVI) Group participates in the MAGIC International trade show which is one of the largest retail exhibitions for fashion held biannually at Las Vegas. The Hang Ten (BVI) Group also attends other trade fairs participated by its licensees, such as the Action Sports Retail show. Advertising includes editorial coverage in fashion magazines and product placement on television and movie productions organised to enhance the public awareness of the “Hang Ten” brand. A biannual publication, “Footprint”, which highlights the Hang Ten (BVI) Group’s latest marketing and design efforts and provides updates on international licensee events and store openings, is distributed to licensees at trade shows.

For each of the three years ended 31 March 2002, the Hang Ten (BVI) Group’s advertising and promotion expenses amounted to about 2.22%, 1.99%, and 1.87% of the Hang Ten (BVI) Group’s total turnover, respectively.

Ð 55 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

SALES AND DISTRIBUTION

The following table sets out the Hang Ten (BVI) Group’s retail distribution network for “Hang Ten” branded products as at 31 March 2002:

Counters in Retail department Franchised shops stores shops Total

Taiwan 156 48 3 207 South Korea Ð 17 71 88 Singapore 19 2 Ð 21 Philippines Ð 6 28 34 Macau Ð Ð 1 1

Total 175 73 103 351

The Hang Ten (BVI) Group endeavours to secure the best possible locations for its shops, generally seeking prime city sites which have a high volume of shopping traffic and high visibility. The Hang Ten (BVI) Group has also strategically positioned shops in suburban districts to capture sales in these areas. The Hang Ten (BVI) Group’s management conducts frequent visits to the retail shops for inspection.

The Hang Ten (BVI) Group generally enters into or extends a lease for a shop after an assessment of such shop’s profitability, taking into account the rental costs. It is the Hang Ten (BVI) Group’s policy to maintain tight control over the rental level of its retail shops. The term of tenancies for most of the Hang Ten (BVI) Group’s shops, other than franchised shops, ranges from two to six years. The leases for the Hang Ten (BVI) Group’s shops normally provide for a fixed rental while the leases for some shop-in- shop retail outlets provide for a certain percentage of the gross receipts to be paid as rental, some of which are subject to a minimum amount. The Hang Ten (BVI) Group has not experienced any significant difficulty in securing sites for its retail shops on satisfactory terms. For the three years ended 31 March 2002, rental expenses amounted to approximately 13.22%, 14.44% and 13.00% of the turnover of Hang Ten (BVI) Group.

The Hang Ten (BVI) Group’s shop design team and marketing team are responsible for the design and layout of all the retail shops. Each of the Hang Ten (BVI) Group’s retail shops is designed to enhance the customers’ shopping pleasure. Emphasis is placed on shop layout and product presentation and shop window designs are changed once every 5 weeks on average. Large posters are used to attract the attention of potential customers and to highlight the “Hang Ten” image. Mannequins are used to present the mix and match of the collection in a creative and interesting way. The Hang Ten (BVI) Group places great emphasis on customer service with all sales personnel receiving extensive training, typically lasting up to seven days, in product knowledge and in-store service.

Ð 56 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

INTELLECTUAL PROPERTY RIGHTS

The Hang Ten (BVI) Group is the owner of the trademark “Hang Ten”. In addition, Hang Ten (BVI) Group is also a registered owner of the trademarks “Lightning Bolt” and “OZZY”. Further details of the Hang Ten (BVI) Group’s intellectual property rights are set out in the paragraph headed “Intellectual property rights” in the section headed “Statutory and general information on Hang Ten Group Holdings Limited” in Appendix VII to this document.

The Directors consider that it is important to protect the Hang Ten (BVI) Group against infringement of its trademarks and are taking appropriate steps to protect these trademarks. Management of the Hang Ten (BVI) Group regularly visit shopping areas to identify any possible infringement of the Hang Ten Group’s trademarks. The Hang Ten (BVI) Group will take appropriate legal action to defend its trademarks if its management finds any infringement of its trademarks.

The Directors are not aware of any infringement of the Hang Ten (BVI) Group’s trademarks in the past and the Directors believe that the Hang Ten (BVI) Group has taken all reasonable measures to deter infringement of its trademarks.

LEASED PROPERTIES

As part of the due diligence process, a sample of leased properties of the Hang Ten (BVI) Group based on their respective volume of business, turnover, profitability, locations and countries has been selected and reviewed. Based on legal advice obtained and public searches conducted in connection with such sample, the following was revealed:

(a) Certain of these leased properties are subject to mortgages created by the owners of the properties. However, based on the public searches conducted, it is unclear whether the lease agreements for these properties have received the consent of the relevant mortgagees. To the extent that any such consent is required and not obtained, Hang Ten may not be able to enforce the lease agreements against these mortgagees in the event that they take possession of the leased properties in question pursuant to an enforcement of the mortgages.

(b) Certain leases were granted to members of the Hang Ten (BVI) Group by parties other than the owners of the properties in question. The Hang Ten (BVI) Group was informed by their landlords that they had prior arrangements in place with the owners of these properties which allow them to grant leases in respect of the properties. To the extent that any such prior arrangement is not in place or are terminated or varied to the detriment of the tenants, or the consent of the relevant owners of the properties are so required and not obtained, the relevant members of the Hang Ten (BVI) Group may not be entitled to continued possession and use of these leased properties.

(c) Certain of the leased properties of the Hang Ten (BVI) Group have been sub-let to other third parties. The lease agreements between the relevant members of the Hang Ten (BVI) Group and the landlords provide that no such sub-leases are allowed. Although no consent was expressly obtained from the landlords in relation to such sub-leases, business licences

Ð 57 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

for these leased properties revealing the names of the actual users of the properties were supplied to the landlords each year. To the extent that the landlords have not explicitly consented to such sub-leases, they may claim a breach of the relevant lease agreements and may use this as a ground to terminate them, unless they are aware of the sub-leases and have consented to the sub-letting arrangements under such circumstances as would estop them from objecting to the sub-leases or claiming those as grounds for terminating the lease agreements.

COMPETITION

The Directors believe that the apparel and accessories industry in the Asian region is highly competitive and are aware that the Hang Ten (BVI) Group competes with numerous domestic and foreign fashion retailers in Asia. Nevertheless, there are, to the best of the Directors’ belief, only a very few number of competitors which are able to operate in Asia on a scale similar to that of the Hang Ten (BVI) Group. The Directors are of the view that the Hang Ten (BVI) Group competes favourably with its competitors in relation to fashion quality value and service by offering broad merchandise selections, personalised service and convenience, as well as exclusive fashion designs bearing the “Hang Ten” brandname, which distinguish its goods from the goods carried by these competitors. Accordingly, the Directors believe that the Hang Ten (BVI) Group has established a strong position in the casual wear, apparel and accessories industry in the Asian region.

RELATIONSHIPS WITH YGM

As at the Latest Practicable Date (i) Mr. Chan Wing Sun was personally interested in 2,072,072 shares in YGM (representing about 1.34% of the issued share capital of YGM as at the Latest Practicable Date); (ii) an aggregate of 29,932,264 shares of YGM (representing about 19.35% of the issued share capital of YGM as at the Latest Practicable Date) were held under various trusts and companies established for the benefit of Mr. Chan Wing Sun and his associates; (iii) 34,595,908 shares of YGM (representing about 22.36% of the issued share capital of YGM as at the Latest Practicable Date) were held by Canfield Holdings Limited, which is beneficially owned by Mr. Chan Wing Sun and his associates; and (iv) 2,917,480 shares of YGM (representing about 1.89% of the issued share capital of YGM as at the Latest Practicable Date) were held by Hearty Development Limited which is beneficially owned by Mr. Chan Wing Sun and his associates.

Mr. Chan Wing Sun, together with his associates, is the controlling shareholder of YGM, a Hong Kong listed company which is principally engaged in the manufacturing, retail and wholesale of apparel and accessories bearing the brandnames of Michel Rene, Aquascutum, Ashworth and Daniel Hechter, property investment and printing in Asia. In addition to the interests in YGM as disclosed in note 13(h)

Ð 58 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED on page 338 of this document, Mr. Kenneth Hung and his family members are interested in 32% of Michel Rene Enterprise Limited, a 68% subsidiary of YGM which is principally engaged in the manufacturing, retail and wholesale of apparel bearing the brandname of “Michel Rene”. The portfolio of the apparel manufactured under the brandname of “Hang Ten”, which are targeted at customers aged between 15 and 45 and which comprises jackets, vests, T-shirts, skirts, pants and jeans as well as other accessories such as bags, caps, socks, shoes, belts and umbrellas, is substantially different to the products bearing the brandnames of Michel Rene, Aquascutum, Ashworth and Daniel Hechter in terms of product types, target customers and unit price. The Directors are of the view that the existing business of the YGM group will not compete or is unlikely to compete with the business of the Hang Ten Group, prior to and following the Introduction.

Save as disclosed above, each of the Investors and the executive Directors, has confirmed that neither he/she nor his/her associates (as defined in the Listing Rules) has any interest in any business or businesses apart from the business of the Hang Ten Group, which competes or is likely to compete with the business of the Hang Ten Group, prior to and following the Introduction.

PRINCIPAL STRENGTHS OF THE HANG TEN (BVI) GROUP

The Directors believe that the Hang Ten (BVI) Group, through its sales network, has established a strong recognition of the “Hang Ten” brandname in the regions where it operates. The Directors consider that the Hang Ten (BVI) Group has the following principal strengths:

Ð well recognised “Hang Ten” brandname in the Asian region including Taiwan, South Korea, Singapore and Philippines;

Ð the extensive experience and expertise of the Hang Ten (BVI) Group’s management team in the retail and manufacturing industries for casual wear and apparel;

Ð the ability of the Hang Ten (BVI) Group’s design team to produce distinctive, quality merchandise of exceptional value;

Ð the ability of the Hang Ten (BVI) Group’s marketing team to enhance its brand image through advertising campaigns; and

Ð strategically located sales networks in the Asian region.

Ð 59 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

FINANCIAL INFORMATION

Summarised audited combined results of the Hang Ten Group for each of the years ended 31 March 2000, 2001 and 2002 are set out below and have been prepared on the basis of preparation set out in section A of the Accountants’ Report included as Appendix II to this document and are extracted therefrom:

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Turnover 145,119 145,946 159,346 Cost of sales (74,483) (73,216) (80,300)

70,636 72,730 79,046 Other revenue 2,426 2,929 2,834 Other net income/(loss) 738 55 (227) Selling expenses (52,890) (55,373) (62,632) Administrative expenses (6,256) (5,784) (5,574) Other operating expenses (1,371) (1,757) (1,716)

Profit from operations 13,283 12,800 11,731 Finance costs (14) (287) (1,025)

Profit from ordinary activities before taxation 13,269 12,513 10,706 Taxation (1,796) (1,192) (1,126)

Profit from ordinary activities after taxation 11,473 11,321 9,580 Minority interests (540) (469) (1,020)

Profit attributable to shareholders 10,933 10,852 8,560

Dividends attributable to the year: Interim dividend declared during the year Ð 1,504 Ð Final dividend proposed after balance sheet date 7,021 Ð Ð Special dividend Ð 26,534 Ð

7,021 28,038 Ð

Basic earnings per share 0.040 cent 0.040 cent 0.032 cent

Ð 60 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Rule 8.06 of the Listing Rules

The Directors are aware of the requirement of Rule 8.06 of the Listing Rules which states that the latest financial period reported on by the reporting accountants must not have ended more than six months before the date of the listing document. Hang Ten has sought and obtained a waiver from strict compliance with such requirement from the Stock Exchange such that the accountants’ report only covers each of the three years ended 31 March 2002. The Directors confirm that they have performed sufficient due diligence on the Hang Ten Group to ensure that, save as disclosed herein, up to the date of issue of this document, there has been no material adverse change in the financial position of the Hang Ten Group since 31 March 2002, and there is no event which would materially affect the information shown in the accountants’ report set out in Appendix II to this document.

For the year ended 31 March 2000

The turnover of the Hang Ten (BVI) Group for the year ended 31 March 2000 was approximately US$145,119,000, of which approximately 90.5%, 3.4% and 6.1% were attributable to retail business, licensing business and wholesaling business respectively. In terms of geographical distribution, approximately 92.7%, 3.3%, 0.6% and 3.4% of the turnover of the Hang Ten (BVI) Group was attributable to sales in Taiwan, Philippines, Singapore and other countries respectively. Gross profit and profit attributable to shareholders of the Hang Ten (BVI) Group for the year ended 31 March 2000 was approximately US$70,636,000 and US$10,933,000 respectively, representing a gross profit margin of approximately 48.7% and a net profit margin of approximately 7.5%. Debtors’ turnover days, creditors’ turnover days and inventory turnover days for the year were 11 days, 25 days and 70 days respectively. The current ratio and quick ratio for the year were 3.98 and 2.94 respectively.

The Hang Ten (BVI) Group declared a dividend of US$7,021,000 for the year ended 31 December 2000. Based on this and assuming 27,100,000,000 Hang Ten Shares were in issue as at 31 December 2000 (which is the number of Hang Ten Shares that will be in issue upon listing of the Hang Ten Shares but before conversion of the CPS issued to the Investors or exercise of the Warrants), the dividend per Hang Ten Share for the year ended 31 December 2000 would be US cent 0.026.

For the year ended 31 March, 2001

The turnover of the Hang Ten (BVI) Group for the year ended 31 March 2001 was approximately US$145,946,000, of which approximately 89.8%, 2.9% and 7.3% were attributable to retail business, licensing business and wholesaling business respectively. In terms of geographical distribution, approximately 90.0%, 2.9%, 2.6%, 1.6% and 2.9% of the turnover of the Hang Ten (BVI) Group was attributable to sales in Taiwan, Philippines, Singapore, South Korea and other countries respectively. Gross profit and profit attributable to shareholders of the Hang Ten (BVI) Group for the year ended 31 March 2001 was approximately US$72,730,000, and US$10,852,000 respectively, representing gross profit margin of approximately 49.8% and a net profit margin of approximately 7.4%.

Increase in the selling expenses for the year ended 31 March 2001 was mainly due to increase in selling expenses in Singapore and South Korea amounted to approximately US$2,216,000. The operation

Ð 61 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED in Singapore and South Korea was expanded during the year. Number of retail outlets in the two countries increased from 7 at the end of March 2000 to 66 as at 31 March, 2001. Despite the expansion of the operations in Singapore and South Korea, the turnover of the Hang Ten (BVI) Group increased by only approximately 0.6% as compared to that for the year ended 31 March 2000 due to the sluggish retail market in Taiwan. The turnover of the Hang Ten (BVI) Group attributable to sales in Taiwan decreased by approximately 2.4%.

Administrative expenses for the year ended 31 March 2001 decreased by approximately US$472,000 (about 7.5%) when compared to that for the year ended 31 March 2000. This was mainly attributed to a decrease in provision for staff bonus of approximately US$270,000 and decrease in donation of approximately US$300,000.

Other operating expenses increased by approximately US$386,000 when compared to that of the prior year which was attributed to an increase in the amount of amortization charge on trademarks of approximately US$492,000 since a full year’s amortization was charged in that year for the trademarks acquired during the previous year.

Debtors’ turnover days increased slightly to 15 days. The balance of trade and other receivables as at 31 March 2001 increased by approximately US$1,294,000 over the amount as at 31 March 2000. The increase was partly due to the trade and other receivables of approximately US$830,000 arising from the South Korean operation which commenced in February 2001. The balance of trade and other receivables as at 31 March 2001 for the Singapore operation increased by about US$424,000 because of the increase in the operation there. The balance of trade and other receivables for the Taiwan operation decreased by approximately US$864,000 which was offset by the increase in the amount receivable in other geographical locations of approximately US$812,000.

Inventory turnover days for the year was 69 days which is comparable to that of the previous year.

Creditors’ turnover days increased to 45 days as the Hang Ten (BVI) Group made maximum use of the credit terms allowed by its suppliers. Trade and other payable balance as at 31 March 2001 amounted to approximately US$13,321,000, representing an increase of approximately US$3,358,000 when comparing to the balance as at 31 March, 2000. The increase was primarily due to substantial amount of purchases of goods made in February and March of 2001 after the Chinese New Year holiday season.

The current ratio and the quick ratio were 1.48 and 1.0 respectively as a result of a decrease in working capital as the Hang Ten (BVI) Group paid approximately US$35 million of dividend during the year.

The Hang Ten (BVI) Group declared a dividend of US$28,038,000 for the year ended 31 December 2001. Based on this and assuming 27,100,000,000 Hang Ten Shares were in issue as at 31 December 2001 (which is the number of Hang Ten Shares that will be in issue upon listing of the Hang Ten Shares but before conversion of the CPS issued to the Investors or exercise of the Warrants), the dividend per Hang Ten Share for the year ended 31 December, 2001 would be US cent 0.103.

Gearing ratio (percentage of total debts to total assets) increased from 0% for the previous year to 18.6% for the year ended 31 March 2001. In 2001, the Hang Ten (BVI) Group disposed of all the listed Ð 62 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED funds in Taiwan, which were valued at US$13,385,000 as at 31 March 2000. The Hang Ten (BVI) Group also declared dividends of US$35,059,000 for the two years ended 31 March, 2001 and the payment of these dividends was financed by internal resources (including the proceeds derived from the disposal of listed funds in Taiwan) and bank borrowings of the Hang Ten (BVI) Group.

For the year ended 31 March 2002

The turnover of the Hang Ten (BVI) Group for the year ended 31 March 2002 was approximately US$159,346,000, of which approximately 93.6%, 2.4% and 4.0% were attributable to retail business, licensing business and wholesaling business, respectively. In terms of geographical distribution, approximately 70.5%, 2.9%, 5.3%, 18.9% and 2.4% of the turnover of the Hang Ten (BVI) Group was attributable to sales in Taiwan, the Philippines, Singapore, South Korea and other countries, respectively. Gross profit and profit attributable to shareholders of the Hang Ten (BVI) Group for the year ended 31 March 2002 was approximately US$79,046,000 and US$8,560,000 respectively, representing a gross profit margin of approximately 49.6% and a net profit margin of approximately 5.4%.

The increase in the turnover of the Hang Ten (BVI) Group was mainly attributable to the increase in sales in South Korea. Selling expenses for the year ended 31 March 2002 increased by US$7,259,000 when compared to that of the previous year. This was mainly due to the increase in the selling expenses for the South Korea operation of US$10,990,000 and the Singapore operation of approximately US$2,050,000 respectively, reflecting the expansion of the South Korea and Singapore operations. Number of retail outlets in South Korea and Singapore increased by 34 and 9 respectively during the year ended 31 March, 2002. The increase in selling expenses in South Korea and Singapore was partly offset by the decrease in the selling expenses of the Taiwan operation of approximately US$5,645,000.

Net profit for the year ended 31 March 2002 decreased by approximately US$2,292,000 which was mainly caused by increase in selling expenses relative to turnover for the year.

Debtors’ turnover days for the year was 22 days and the amount of trade debtors as at 31 March, 2002 increased by approximately US$3,399,000 when comparing to the balance of trade debtors as at 31 March, 2001. Trade and other receivables amounted to US$17,598,000 as at 31 March 2002, representing an increase of approximately US$4,876,000 over the balance as at 31 March 2001. This was mainly due to the increase in the balance of trade and other receivables of the South Korea and Taiwan operations.

Inventory turnover days for the year was 81 days. When compared to the balance of inventories as at 31 March 2001, the amount of inventories (net of provision) of approximately US$16,429,000 as at 31 March 2002 had increased by approximately US$3,293,000. This was attributed to the increase in the amount of inventories of the South Korea operation as at 31 March 2002 as the level of inventories was increased to cater for the expansion of the operation in South Korea.

Creditors’ turnover days for the year was 42 days which was comparable to that of the year ended 31 March 2001.

Current ratio and quick ratio for the year increased to 1.77 and 1.18 respectively, comparing to that of the year ended 31 March 2001.

Ð 63 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

No dividend was declared by the Hang Ten (BVI) Group for the year ended 31 March 2002.

On 9 November 2001, shareholders who together held approximately 97.01% of the issued share capital of ILC entered into an agreement to sell their respective interests in ILC to Hang Ten (BVI) for a total consideration of approximately US$54.6 million. On 9 November 2001, certain of these shareholders also entered into a subscription agreement with Hang Ten (BVI) pursuant to which they agreed to subscribe for and Hang Ten (BVI) agreed to issue a total of 999,999 new shares of US$0.1 each in the share capital of Hang Ten (BVI) at US$17 per share for a total subscription price of approximately US$17 million. The acquisition of ILC was financed by the subscription proceeds of US$17 million, shareholders’ loans of US$20 million and bank loans of US$17.6 million. Upon completion of this reorganisation on 31 December 2001, Hang Ten (BVI) became the holding company of ILC.

(a) Hang Ten (BVI) shall fail to repay any principal or any other sum payable on the due date in accordance with the provision of the shareholder’s loan agreements;

(b) Hang Ten (BVI) shall commit a material breach of any other term of the shareholder’s loan agreements and such breach is not remedied within sixty (60) days after the lender has given to Hang Ten (BVI) written notice requiring the remedy of such breach; or

(c) if any petition (which shall not be discharged within thirty (30) days after it is made) or order is made for the winding up, liquidation of Hang Ten (BVI), or for the appointment of a liquidator, receiver, trustee or similar official of Hang Ten (BVI) or all or a substantial part of its assets.

On 21 June 2002, each of Asian Wide and YGM entered into an agreement supplemental to its shareholder’s loan agreement with Hang Ten (BVI). Pursuant to these supplemental agreements, Hang Ten (BVI) agreed to prepay to Asian Wide and YGM principal amounts of US$2.7 million and US$900,000 owing to them respectively. As at the Latest Practicable Date, aggregate principal amounts of US$12.3 million and US$4.1 million remain owing by Hang Ten (BVI) under the shareholder’s loans granted to it by members of the Kung Family and YGM respectively.

The shareholders’ loans will only be repayable in one lump sum on 8 November 2011. As confirmed by the Directors, the loans are intended to be repaid out of internal resources of the Hang Ten Group. The business of the Hang Ten (BVI) Group has been profitable with a total profit in excess of US$30 million during the track record period. The Directors believe that the Hang Ten Group will have sufficient resources to repay the shareholders’ loans when due.

Ð 64 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

The Kung Family and YGM will provide an undertaking to Hang Ten (BVI) and the Sponsors that they will not request Hang Ten (BVI) to repay the aforesaid shareholders’ loans until at least 31 March 2004 even if an event of default as set out above occurs, unless with the Sponsors’ prior written approval. The Sponsors’ approval will only be given if, after an assessment of the then financial situation and prospect of the Hang Ten Group, the Sponsors can come to a reasonable opinion that the requisite repayment will not affect the Hang Ten Group’s ability to meet its liabilities that fall due in the normal course of business within a reasonable period. In addition to the Sponsors’ prior written approval, the independent non-executive Directors will give an opinion and confirm that early repayment will not materially and adversely affect the business and operations of the Hang Ten Group following such repayment.

In November 2001, Hang Ten (BVI) obtained a banking facility of US$19 million, out of which about US$17.6 million had been utilized to finance its acquisition of ILC. The bank loan will be repaid by Hang Ten (BVI) in five installments starting from December 2002 at a floating interest rate, representing about 4% per annum based on the prevailing prime rate. The Directors presently intend to repay the principal and interests of the aforesaid bank loans from internally generated funds of the Hang Ten (BVI) Group. Taking into account the financial resources available to the Hang Ten (BVI) Group, which include internally generated funds and the present available banking facilities, the Sponsors concur with the Directors’ view that, after completion of the Proposal, the Hang Ten Group will have sufficient working capital to meet its present requirements.

The gearing ratio of the Hang Ten (BVI) Group (percentage of total debts to total assets) increased from 18.6% in the year ended 31 March 2001 to 57.9% as a result of the completion of the acquisition of ILC.

TAXATION

For the three years ended 31 March 2002, the Hang Ten (BVI) Group has not carried out any operation in Hong Kong and accordingly is not subject to profits tax in Hong Kong. Those members of the Hang Ten (BVI) Group that carry on business in Taiwan, South Korea, Singapore, the Philippines, US, Hungary, the Netherlands and the Netherlands Antilles are subject to income tax of the respective countries. Income taxes for companies that operate in these jurisdictions have been provided for based on the applicable income tax rates of each jurisdiction during the three years ended 31 March 2002.

The effective tax rate of the Hang Ten (BVI) Group for the year ended 31 March 2001 is lower than that for the year ended 31 March 2000 as the proportion of income not subject to taxation is higher for the year ended 31 March 2001. The effective tax rate for the year ended 31 March 2002 is slightly higher than that for the year ended 31 March 2001 which is mainly attributable to the increase in the proportion of income derived from the South Korean operation which is subject to a higher income tax rate.

According to applicable tax rules in Taiwan, a land appreciation tax is charged on the difference between the land price as per the Public Land Value quoted by Land Department of Taipei City Government and the original cost of acquisition of the piece of land. Hence, the valuation of the land is not relevant in determining the potential tax liability. On the other hand, the buildings will be sold at a loss based on the current valuation, and there is no potential tax liability. No tax liability will crystallise for the Hang Ten

Ð 65 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Group on any disposal of any of its investment properties which are the subject of the valuation by Chesterton Petty Limited set out in Appendix IV in the context of Rule 11.3 of the Code.

INTENTION REGARDING HANG TEN AND FUTURE PLANS

The Directors believe that the Asian market for apparel and accessories is large and consider that the Hang Ten Group’s business strategy of offering distinctive, contemporary and quality merchandise to a specialised market segment presents the Hang Ten Group with opportunities for future growth. The Hang Ten Group’s objective is to become a well-known brand for apparel and accessories in the Asian region, offering a wide range of quality merchandise to different market segments.

In order to achieve the above business objective and maintain its competitive edge in the domestic market, the Hang Ten (BVI) Group will continually pursue the existing strategies of the Hang Ten (BVI) Group and expansion plans that focus primarily on merchandising, marketing and distribution.

The growing popularity of the Hang Ten (BVI) Group’s product in the Asian market, in particular the South Korean market, provides the Hang Ten Group with huge room for expansion. The Directors intend to establish more shops in South Korea in order to take advantage of this potential for growth. The Directors believe that opening more shops and focusing on the South Korean market will enable the Hang Ten Group to attract those potential customers in South Korea and in return provide growth to its business.

Given that Akai is in compulsory liquidation, that it ceased to carry on business on 23 August 2000 (the date of the winding-up order of the Hong Kong Court), that it has no employees and that no existing business operation of Akai will be acquired by Hang Ten, the Investors’ intention regarding Akai is not included in this document.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Executive Directors

Chan Wing Sun, aged 54, received a Bachelor’s degree from the University of Manchester, United Kingdom in 1970 and qualified as a Chartered Accountant in 1973. Mr. Chan has been the managing director of YGM since 1987. Mr. Chan was appointed as a director of Hang Ten on 19 July 2002 and the Chairman of Hang Ten on 7 August 2002 and is responsible for the strategic planning and overall policy of the Hang Ten (BVI) Group. He joined the Hang Ten (BVI) Group in 1991.

Kenneth Hung, aged 35, is the Managing Director of the Hang Ten (BVI) Group and has overall responsibility for the Hang Ten (BVI) Group’s operation in Taiwan, Korea, Singapore and Philippines. Mr. Hung was appointed as a director of Hang Ten on 19 July 2002. Mr. Hung graduated from the University of Minnesota in the US and has over 10 years experience in the apparel retailing industry. He joined the Hang Ten (BVI) Group in 1992.

Wang Li Wen, aged 49, is the Chief Financial Officer of the Hang Ten (BVI) Group’s operation in Taiwan and has overall responsibility in the area of administration, finance, personnel and EDP development. Ms. Wang was appointed as a director of Hang Ten on 7 August 2002. She graduated from Tam Kang university in Taiwan with a bachelor degree in economics and has over 25 years of experience in the apparel retailing industry. She joined the Hang Ten (BVI) Group in 1993.

Ð 66 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Kao Yu Chu, aged 46, is the Chief Operations Officer of the Hang Ten (BVI) Group’s operation in Taiwan and has overall responsibility in the area of product development, sales, advertising and marketing. Ms. Kao was appointed as a director of Hang Ten on 7 August 2002. She started her career in the apparel retailing industry as a shop manager and worked her way up to her existing position. She has over 25 years of experience in the apparel retailing industry. She joined the Hang Ten (BVI) Group in 1993.

Independent non-executive Directors

Kwong Chi Keung, aged 48, is qualified as a solicitor in Hong Kong, England, Australia (Victoria) and Singapore and is a notary public. Mr. Kwong was appointed as an independent non-executive director of Hang Ten on 25 October 2002. Other than his appointment as an independent non-executive Director of Hang Ten, Mr. Kwong has no financial or other interest in the business of Hang Ten or its subsidiaries, and has no previous connection with any connected persons of Hang Ten. Mr. Kwong is a senior partner of Sit Fung Kwong & Shum and his main areas of practice include intellectual properties (registration, licensing and enforcement of patent, design, copyright and trademark), injunction proceedings, banking, public and private corporate transactions, China projects and complex commercial litigation. Mr. Kwong is the Hong Kong Group President of the Asian Patent Attorneys Association and is member of the Intellectual Property Committee of the Law Society of Hong Kong.

So Hon Cheung, Stephen, aged 46, is a partner of the accounting firm T.M. Ho, H.C. So & Company and is a fellow member of the Hong Kong Society of Accountants, a member of the Canadian Institute of Chartered Accountants and a member of the Society of Certified Management Accountants of Canada. Mr. So was appointed as an independent non-executive director of Hang Ten on 25 October 2002. Other than his appointment as an independent non-executive Director of Hang Ten, Mr. So has no financial or other interest in the business of Hang Ten or its subsidiaries, and has no previous connection with any connected persons of Hang Ten. He holds a bachelor degree in commerce from the University of British Columbia, Canada and is a visiting professor of various universities and colleges in Beijing, Liaoning, Sichuan, Xinjiang, Qinghai and Guangdong in China. He has over 12 years’ experience in manufacturing, wholesale and trading in the commercial sector and over 10 years’ experience of private accounting practice in various companies in Hong Kong and Canada.

Senior management

Kung, Ging Kong, Dennis, aged 61, is the general manager of the Taiwan operations of the Hang Ten (BVI) Group. He joined the Hang Ten (BVI) Group in 1993. Mr. Kung has over 26 years of experience in the garment industry. Prior to joining the Hang Ten (BVI) Group, he was the general manager of East Jean Ltd, Hong Kong, Taiwan Branch, from 1988 to 1993.

Paul Epner, aged 43, is the president of the licensing operation of the Hang Ten (BVI) Group. Mr. Epner obtained a Bachelor of Arts degree in political science from the State University of New York and a Juris Doctor of Law degree from the School of Law of Emory University. He was admitted to the New York Bar in 1984. He has practised law in the U.S. and has over 12 years of experience in trademark marketing and licensing. He joined the Hang Ten (BVI) Group in 1996.

Shivkumar Ramanathan, aged 35, is the President of the Hang Ten (BVI) Group’s overseas retailing and franchising operation. Prior to this he served as the General Manager of the Hang Ten (BVI) Group’s Ð 67 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Philippines operation. He graduated from the University of Bombay with a Bachelor degree in Commerce and is also qualified as a Chartered Financial Analyst. Before joining the Hang Ten (BVI) Group in 1997, he worked as a financial controller for two well-known companies in Hong Kong for more than 5 years.

Tan, Yong Huat Danny, aged 43, is the general manager of the Singapore operation of the Hang Ten (BVI) Group. Mr. Tan has over 20 years working experience in the hotel and catering industry and retailing industry. He holds a diploma in management accounting and finance and a graduate diploma in marketing. Prior to joining the Hang Ten (BVI) Group in March 2002, Mr. Tan had worked for three retailers for about 15 years.

Daniel Chin, aged 35, is the chief operation officer of the Hang Ten (BVI) Group’s operation in the Philippines. He has more than 10 years of experience in the field of retail operation. He completed his college education at Institute of Technology, Sydney, Australia majored in accounting. He joined the Hang Ten (BVI) Group in 1997.

Chen Kin-No, Jino, aged 41, is the senior EDP Manager of the Hang Ten (BVI) Group’s operation in Taiwan responsible for the development and maintenance of the Hang Ten (BVI) Group’s computer system. He is a university graduate with a bachelor degree in computer science and has more than 11 years of working experience in the computer field. He joined the Hang Ten (BVI) Group in 1993.

John M. De Moss, aged 44, is the chief financial officer of the licensing operation of the Hang Ten (BVI) Group. Prior to joining the Hang Ten (BVI) Group in 1996, he has worked for both public and private companies in various senior positions overseeing financial and accounting matters. He graduated from the Oregon State University in 1980 with a Bachelor of Science degree.

Chu, Lan Kun, aged 47, is the chief financial officer of the Singapore operation of the Hang Ten (BVI) Group. Ms. Chu obtained a diploma in business management from the Hong Kong Baptist College. She has over 24 years of experience in accounting and finance in Hong Kong and Singapore. She joined the Hang Ten (BVI) Group in 2000.

Huang Tsui-Ping, Tracy, aged 34, is the finance manager of the Hang Ten (BVI) Group’s operation in Taiwan. She joined the Hang Ten (BVI) Group in 1999. Ms. Huang has over 12 years of experience in accounting and finance. She obtained a bachelor degree of science in accounting from the National Chung Chi University in Taiwan.

Tiu, Helen Tong, aged 52, is the financial controller of the Philippines operation. She joined the Hang Ten (BVI) Group in 1998. Ms. Tiu has over 24 years of experience in finance and administration. She obtained a bachelor of science degree from the Adamson University in Manila, the Philippines and a bachelor of science degree and bachelor of arts degree in accounting from the Philippine School of Business Administration.

Young Guk Kim, aged 46, is the chief executive officer of the Hang Ten (BVI) Group’s operation in Korea. He had over 16 years of experience in retail, sales and marketing. He graduated from Seoul National University with a bachelor degree in landscape architecture. He joined the Hang Ten (BVI) Group in 2002.

Ð 68 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Eric Timba, aged 34, is the design director and is responsible for shaping the direction of colour, fabrication and style of the products of the Hang Ten (BVI) Group. He had obtained the 1998 “Golden Hanger” award as San Diego’s top apparel designer. Mr. Timba had over 12 years of experience in the fashion garment industry and he joined the Hang Ten (BVI) Group in 1998.

J. Christopher Ross, aged 36, is the vice president of the licensing operation. He is responsible for the development of new licensing ventures. Mr. Ross is a graduate of the University of Maryland, Robert H. Smith School of Business in the U.S. He joined the Hang Ten (BVI) Group in 1999.

Lam Wai Ho, Stephen, aged 44, will be appointed as the secretary of Hang Ten upon listing of the Hang Ten Shares on the Stock Exchange. Mr. Lam obtained a bachelor of economics degree from Macquarie University, Australia and has over 17 years of experience in auditing, accounting and company secretarial field. He is an associate member of the Hong Kong Society of Accountants and is a certified practising accountant of CPA Australia.

Ira Stuart Outerbridge III, aged 51, is the Bermuda resident secretary of Hang Ten. Mr. Outerbridge III obtained a bachelor of arts degree from the University of North Carolina, United States of America and is a fellow of The Institute of Chartered Secretaries and Administrators (FCIS). Mr. Outerbridge III will resign as secretary of Hang Ten upon listing of the Hang Ten Shares on the Stock Exchange and will thereafter be appointed as assistant secretary of Hang Ten.

Employees

As at 31 March 2002, the total number of employees of the Hang Ten (BVI) Group was 1,483. Breakdown of the employees categorized by activities and geographical location are as follows:

Activities Total

Finance, administration and human resources 62 Information technology 15 Sales and marketing 113 Merchandising, sourcing and production control 34 Warehouse 106 Retail shops 1,153

Total 1,483

Location Number of employees

Taiwan 1,039 South Korea 111 Singapore 123 Philippines 199 Others 11

Total 1,483

Ð 69 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

RELATED PARTY TRANSACTIONS

During the three years ended 31 March 2002, the Hang Ten (BVI) Group conducted certain transactions with related parties, details of which are set out in note 30 of section B of the Accountants’ Report as shown in Appendix II to this document. Some of these transactions will be terminated and therefore will not constitute connected transactions for Hang Ten under the Listing Rules upon the listing of the Hang Ten Shares on the Stock Exchange.

Hang Ten Korea

On 1 January 2001, ILC entered into a loan agreement with Hang Ten Korea pursuant to which ILC agreed to grant a shareholder’s loan in an aggregate principal amount of up to approximately US$2.6 million (equivalent to approximately HK$20.28 million) to Hang Ten Korea by way of instalments. On 31 December 2000, Global Inc., being the other shareholder of Hang Ten Korea, entered into a loan agreement with Hang Ten Korea pursuant to which Global Inc. agreed to grant a shareholder’s loan in Korean Won that is equivalent to an aggregate principal amount of up to approximately US$1.11 million (equivalent to approximately HK$8.67 million) to Hang Ten Korea by way of instalments.

Pursuant to the terms of the respective loan agreements, each of the shareholder’s loan from ILC and Global Inc. to Hang Ten Korea is unsecured and interest free. Any subsequent instalment advanced by ILC and Global Inc. is repayable by Hang Ten Korea in one lump sum on the date falling 366 days from the date on which such instalment is advanced, unless otherwise agreed by the parties.

On 11 October 2002, a board meeting of Hang Ten Korea, a company which was originally held as to 70% by ILC and 30% by Global Inc., was held and approved the issuance of 440,000 new shares in its share capital to be subscribed for by its shareholders in proportion to their existing shareholdings in Hang Ten Korea. As Global Inc. has confirmed that it will waive its right to subscribe for its portion of the new shares, ILC took up the entire portion of the newly issued shares at a cash consideration of W$4,400 million (or approximately HK$27.8 million) pursuant to a joint venture agreement entered into between shareholders of Hang Ten Korea dated 23 October 2000. As a result of the said subscription, Hang Ten Korea is owned as to 92% by ILC and 8% by Global Inc.. The proceeds derived from the subscription, which was financed by the internal resources of ILC, were used to repay the outstanding shareholders loans (that had previously been utilized by Hang Ten Korea) of approximately US$1.8 million (or approximately HK$14.5 million) and the remaining balance will be reserved as general working capital. Given that the shareholders loans have been fully settled, such transaction will not constitute connected transactions for Hang Ten under the Listing Rules upon the listing of the Hang Ten Shares on the Stock Exchange.

Ð 70 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

CONTINUING CONNECTED TRANSACTIONS

The Hang Ten (BVI) Group has engaged in certain transactions which will constitute and continue to constitute, following the listing of the Hang Ten Shares on the Stock Exchange, connected transactions with respect to Hang Ten under Chapter 14 of the Listing Rules. Details of the transactions are as follows:

(a) Insurance

In order to obtain a more favourable rate of premium from the insurance company, Michel Rene Enterprise Limited (“Michel Rene”), a subsidiary of YGM owned as to approximately 68% by YGM and as to approximately 32% by Mr. Kenneth Hung (an executive Director) and his family members, and the Hang Ten (BVI) Group are currently jointly insured as beneficiaries under a general automobile liability insurance policy and a fire insurance policy on assets. Based on their respective insured amounts, Michel Rene and the Hang Ten (BVI) Group pay their respective insurance premiums, which amount to US$26,000 and US$134,000 respectively for the year ended 31 March 2002, directly to the insurance company. As the Hang Ten (BVI) Group is covered as one of the beneficiaries under these insurance policies, it is entitled to make claims and be compensated directly under these insurance policies.

As such arrangement is entered into on normal commercial terms and in the ordinary and usual course of business of Michel Rene and the Hang Ten (BVI) Group, such arrangement falls within the category of transactions prescribed under Rules 14.24(5) of the Listing Rules and is exempted from disclosure and shareholders’ approval requirements applicable to connected transactions under Chapter 14 of the Listing Rules.

(b) Printing

Hong Kong Security Printing Limited, a subsidiary of YGM, will be providing the services of printing the share certificates for Hang Ten upon listing of Hang Ten Shares on the Stock Exchange. As the consideration receivable by Hong Kong Security Printing Limited from Hang Ten under this arrangement is expected not to exceed HK$1,000,000 and will be entered into on normal commercial terms, such arrangement falls within Rule 14.24(5) of the Listing Rules and are exempted from the disclosure and shareholders’ approval requirements applicable to connected transactions under Chapter 14 of the Listing Rules.

The Hang Ten (BVI) Group has entered into certain sub-lease agreements with Michel Rene relating to the sub-lease arrangement of store premises for retailing purpose. The terms of the sub-lease agreements, which were determined based on various factors, including (i) the length of the original tenancy agreement; and (ii) the floor area to be occupied by each company, were arrived at by the Hang Ten (BVI) Group and Michel Rene after arm’s length negotiations. Michel Rene is a subsidiary of YGM owned as to approximately 68% by YGM and as to approximately 32% by Mr. Kenneth Hung, an executive Director, and his family members. Ð 71 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Immediately upon Closing but before conversion of any CPS held by the Investors or exercise of any Warrants, each of YGM, and Mr. Kenneth Hung and his associates, will be a substantial shareholder of Hang Ten and will be connected persons of Hang Ten under the Listing Rules. Accordingly, such sub-leases, which will continue following Closing, will constitute continuing connected transactions for Hang Ten under Chapter 14 of the Listing Rules.

For each of the years ended 31 March 2000, 2001, and 2002, the rentals received by Michel Rene from the Hang Ten (BVI) Group amounted to US$74,000, US$41,000 and US$30,000 respectively and the rentals paid by Michel Rene to the Hang Ten (BVI) Group amounted to approximately US$296,000, US$289,000 and US$233,000 respectively. These rentals were arrived at after arms-length negotiations and with reference to actual rental payments pursuant to the original rental agreements. The Directors are of the view that such sub-lease arrangements have been entered into on normal commercial terms and are fair and reasonable as far as shareholders of Hang Ten, taken as a whole, are concerned.

As the rental expense and income of the Hang Ten (BVI) Group pursuant to the sub-lease arrangement with Michel Rene are expected to exceed HK$1,000,000, but will not exceed HK$10,000,000, such sub-lease arrangement will be disclosed in Hang Ten’s next published annual report and accounts in accordance with Rule 14.25(1)(A) to (D) of the Listing Rules after the listing of the Hang Ten Shares.

(d) Shareholders’ loans to Hang Ten (BVI)

On 9 November 2001, members of the Kung Family and YGM entered into shareholder’s loan agreements with Hang Ten (BVI) pursuant to which an aggregate principal amount of US$20 million was advanced by them to Hang Ten (BVI), as to US$15 million by the Kung Family collectively and as to US$5 million by YGM. On 21 June 2002, each of Asian Wide and YGM entered into an agreement supplemental to its shareholder’s loan agreement with Hang Ten (BVI). Pursuant to these supplemental agreements, Hang Ten (BVI) agreed to prepay to Asian Wide and YGM principal amounts of US$2.7 million and US$900,000 owing to them respectively. As at the Latest Practicable Date, aggregate principal amounts of US$12.3 million and US$4.1 million remain owing by Hang Ten (BVI) under the shareholder’s loans granted to it by members of the Kung Family and YGM respectively. These shareholders’ loans were utilized by Hang Ten (BVI) for the acquisition of an approximately 97.01% interest in ILC in December 2001, details of which are set out on pages 47 and 64 of this document.

Immediately upon Closing but before conversion of any CPS issued to the Investors or exercise of any Warrants, the Kung Family and YGM will be interested in approximately 53.87% and 18.45% of the issued ordinary share capital of Hang Ten and will be connected persons of Hang Ten under the Listing Rules. Accordingly, the granting of these shareholders’ loans will constitute connected transactions for Hang Ten under the Listing Rules following Closing.

Ð 72 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Pursuant to the terms of the shareholder’s loan agreements, these shareholders’ loans are unsecured and repayable by Hang Ten (BVI) in one lump sum on 8 November 2011 or earlier if an event of default occurs under these agreements. The loans bear interest at the rate of 6% per annum payable yearly in arrears unless Hang Ten (BVI) elects to capitalise such interest in which event it will form part of the principal amount of the loans and will bear interest at the same rate.

The Directors are of the view that such shareholder’s loan agreements have been entered into on normal commercial terms and are fair and reasonable as far as shareholders of Hang Ten, taken as a whole, are concerned.

Since the advances of these shareholder’s loans will constitute the granting of financial assistance by connected persons of Hang Ten to the Hang Ten Group following Closing which does not involve the provision of security by the Hang Ten Group, they fall within the category of transactions prescribed under Rule 14.24(8) of the Listing Rules and are exempt from the disclosure and shareholders’ approval requirements applicable to connected transactions under Chapter 14 of the Listing Rules.

(e) Hang Ten Phils., Corp.

(i) Sales to Hang Ten Phils., Corp.

Hang Ten Enterprises Limited (“HTEL”) a wholly-owned subsidiary of ILC which is principally engaged in Taiwan retailing and wholesaling and overseas wholesaling, supplies apparel and accessories bearing the “Hang Ten” brandname to Hang Ten Phils, Corp. (“Hang Ten Phils.”) on an open account basis with credit terms of approximately 90 days for retailing in the Philippines. For each of the years ended 31 March 2000, 2001, and 2002, the sales to Hang Ten Phils. by the Hang Ten (BVI) Group amounted to approximately US$2,670,000, US$2,318,000 and US$2,575,000 respectively.

Hang Ten Phils. is a non wholly-owned subsidiary of ILC indirectly held as to 55% by ILC and is principally engaged in the retailing of apparel and accessories bearing the brandname of “Hang Ten” in the Philippines. As Hang Ten Phils. is the retailing arm of the Hang Ten (BVI) Group in the Philippines, the purchase of apparel and accessories by Hang Ten Phils. from the Hang Ten (BVI) Group described above for retailing in the Philippines is carried out in the ordinary and usual course of business of Hang Ten Phils.. The remaining 45% of Hang Ten Phils. is collectively held by Mr. Chua Kun Yao, Mr. William T. De Leon, Mr. Johnny Tan and Ms. Nancy C. Lim (collectively “Chua and company”) and save for Ms. Nancy C. Lim, each of them is a director of Hang Ten Phils.. Accordingly, following Closing, such supplies of apparel and accessories will constitute continuing connected transactions for Hang Ten under the Listing Rules.

Ð 73 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

The Directors are of the view that such transactions have been entered into on normal commercial terms and in the ordinary and usual course of business of the HTEL and Hang Ten Phils. and are fair and reasonable as far as shareholders of Hang Ten, taken as a whole, are concerned.

The unit prices of such sales between HTEL and Hang Ten Phils. and/or their associates (as defined in the Listing Rules) are determined on an arms-length basis, on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to Hang Ten than terms available to independent third parties, on terms that are fair and reasonable as far as the interests of the shareholders of Hang Ten, taken as a whole, are concerned and will be entered into on a regular basis and in the ordinary course of business of HTEL. Accordingly, these transactions will constitute continuing connected transactions for Hang Ten under Rule 14.26 of the Listing Rules following Closing.

(ii) Sales to and distribution by substantial shareholders

The Hang Ten (BVI) Group sells products bearing the “Hang Ten” brandname to Chua and company, being the other shareholders of Hang Ten Phils., and/or their associates (as defined in the Listing Rules) for distribution by them through door-to-door sales network in the Philippines. For each of the years ended 31 March 2000, 2001, and 2002, the sales to Chua and company and/or their associates (as defined in the Listing Rules) by the Hang Ten (BVI) Group amounted to approximately US$3,617,000, US$4,077,000 and US$1,766,000 respectively.

Since Chua and company collectively hold 45% of Hang Ten Phils. which will be a non wholly-owned subsidiary of Hang Ten following Closing, they will be connected persons of Hang Ten and the transactions with Chua and company and/or their associates (as defined in the Listing Rules) will constitute connected transactions for Hang Ten following Closing.

The unit prices of such sales between the Hang Ten (BVI) Group and Chua and company and/or their associates (as defined in the Listing Rules) are determined on an arms- length basis, on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to Hang Ten than terms available to independent third parties, on terms that are fair and reasonable as far as the interests of the shareholders of Hang Ten, taken as a whole, are concerned and will be entered into on a regular basis and in the ordinary course of business of the Hang Ten (BVI) Group. Accordingly, these transactions will constitute continuing connected transactions for Hang Ten under Rule 14.26 of the Listing Rules following Closing.

(iii) Licence to an associate of substantial shareholders

HTIL Corporation B.V. (“HTIL”), an indirect wholly-owned subsidiary of ILC, is a licensor under the license agreement dated 10 June 1998 as supplemented by an Ð 74 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

amendment agreement (“Avon Dale License Agreement”). Under this agreement, an exclusive license was granted to Avon Dale Garments, Inc. (“Avon Dale”), an associate of Chua and company, being the other shareholders of Hang Ten Phils., to use in the Philippines the word “Hang Ten” and associated trademarks in the design, manufacture, advertising, sale and promotion of certain clothing and personal care products. This agreement is for a period from 1 January 1998 to 31 December 2003, unless earlier terminated by HTIL by reason of a default or insolvency of the licensee.

Since Avon Dale is an associate of Chua and company who collectively hold 45% of Hang Ten Phils., a non wholly-owned subsidiary of Hang Ten following Closing, Avon Dale will be a connected person of Hang Ten and the transactions under the Avon Dale License Agreement will constitute connected transactions for Hang Ten following Closing.

Pursuant to the Avon Dale License Agreement, Avon Dale is required to pay to HTIL royalties accounted for on a quarterly basis that is equal to the greater of (a) the minimum royalties applicable for the relevant years as set out in the agreement and (b) 6% of the gross price charged to consumers for the licensed items, less any actual returns and other allowances. For each of the years ended 31 March 2000, 2001, and 2002, the royalties payable by Avon Dale to the Hang Ten (BVI) Group amounted to approximately US$39,000, US$47,000 and US$75,000 respectively. The Directors are of the view that such transactions have been entered into on normal commercial terms and in the ordinary and usual course of business of the Hang Ten (BVI) Group and are fair and reasonable so far as the shareholders of Hang Ten, taken as a whole, are concerned.

As the total annual royalty fee receivable by HTIL from Avon Dale for any year during the term of the license is not expected to exceed HK$1,000,000, the Avon Dale License Agreement falls within Rule 14.24(5) of the Listing Rules and are exempted from the disclosure and shareholders’ approval requirements applicable to connected transactions under Chapter 14 of the Listing Rules.

(f) Hang Ten Korea Corp.

(i) Sourcing and purchases from Hang Ten (BVI) Group

Pursuant to an agreement dated 31 December 2000, HTEL, a wholly-owned subsidiary of ILC, appointed Hang Ten Korea as the exclusive distributor in South Korea for products for which ILC Trademark Corporation, a wholly-owned subsidiary of ILC, maintains the “Hang Ten” trademarks, except for automobiles, boats, motorcycles, food items, beverage items, promotional items, products sold via the world wide web and sporting goods. This agreement is for an indefinite period, unless earlier terminated by reason of a default, liquidation or bankruptcy of either party or by reason of the termination of the joint venture agreement relating to the establishment and operation of Hang Ten Korea entered into between ILC and Global Inc.. HTEL is also principally

Ð 75 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

engaged in the franchising of “Hang Ten” branded products outside Taiwan and, as such, the agreement described above is entered into by HTEL in its ordinary and usual course of business. In addition to the aforesaid sourcing arrangement, Hang Ten Korea also purchases apparel and accessories from Chinaway Trading Co., Limited, a wholly- owned subsidiary of ILC. As Chinaway Trading Co., Limited is principally engaged in the trading of apparels, the sales of products by Chinaway Trading Co., Limited to Hang Ten Korea described above are carried out in the ordinary and usual course of business of Chinaway Trading Co., Limited. For each of the years ended 31 March 2001 and 2002, the amount payable by Hang Ten Korea to the Hang Ten (BVI) Group amounted to approximately US$721,000 and US$10,156,000 respectively.

Hang Ten Korea is a non wholly-owned subsidiary of ILC principally engaged in the retailing of apparel and accessories bearing the brandname of “Hang Ten” in South Korea. As Hang Ten Korea is the retailing arm of the Hang Ten (BVI) Group in South Korea, the distribution of products by Hang Ten Korea bearing the “Hang Ten” trademarks and the purchases of apparel and accessories from Chinaway Trading Co., Limited for retailing in South Korea as described above are carried out in the ordinary and usual course of business of Hang Ten Korea. Hang Ten Korea is held as to 92% by ILC. The remaining 8% of Hang Ten Korea is held by Gobal Inc., an associate of Mr. Young Chang Lee, a director of Hang Ten Korea. Accordingly, following Closing, the transactions between HTEL and Chinaway Trading Co., Limited respectively and Hang Ten Korea described above will constitute connected transactions for Hang Ten under the Listing Rules.

The Directors are of the view that such transactions have been entered into on normal commercial terms and in the ordinary and usual course of business of HTEL, Chinaway Trading Co. Limited and Hang Ten Korea and are fair and reasonable as far as shareholders of Hang Ten, taken as a whole, are concerned.

Since such transactions will constitute transactions between a wholly-owned subsidiary of ILC and a non wholly-owned subsidiary of ILC following Closing and (i) they are entered into on normal commercial terms in the ordinary and usual course of business of such subsidiaries of ILC; and (ii) no connected person of Hang Ten is a substantial shareholder in Hang Ten Korea; such transactions fall within the category of transactions prescribed under Rule 14.24(4) of the Listing Rules and are exempted from the disclosure and shareholders’ approval requirements applicable to connected transactions under Chapter 14 of the Listing Rules.

(ii) Licence to Hang Ten Korea

Pursuant to a license agreement dated 1 January 2001 (“Hang Ten Korea License Agreement”), HTIL, an indirect wholly-owned subsidiary of ILC, granted to Hang Ten Korea an exclusive license to use in South Korea the word “Hang Ten” and associated trademarks in the design, manufacturing, advertising, sale and promotion of all products for which HTIL maintains trademarks in South Korea (“Hang Ten Korea Licensed

Ð 76 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Items”). The Hang Ten Korea License Agreement is for an indefinite period commencing as of 1 January 2001, unless earlier terminated by HTIL by reason of a default or insolvency of Hang Ten Korea.

HTIL is a member of the Hang Ten (BVI) Group which principally engages in the licensing of “Hang Ten” trademarks. As such, the Hang Ten Korea Licence Agreement is entered into by HTIL in its ordinary and usual course of business. Hang Ten Korea is a non wholly-owned subsidiary of ILC principally engaged in the retailing of apparel and accessories bearing the brandname of “Hang Ten” in South Korea. As Hang Ten Korea is the retailing arm of the Hang Ten (BVI) Group in South Korea, the Hang Ten Korea Licence Agreement is entered into by Hang Ten Korea in its ordinary and usual course of business to facilitate its retailing of products bearing the word “Hang Ten” and associated trademarks in South Korea. Hang Ten Korea is held as to 92% by ILC. The remaining 8% of Hang Ten Korea is held by Global Inc., an associate of a director of Hang Ten Korea. Accordingly, the transaction contemplated under the Hang Ten Korea License Agreement will constitute a connected transaction for Hang Ten under the Listing Rules following Closing.

Pursuant to the Hang Ten Korea License Agreement, Hang Ten Korea is required to pay to HTIL royalties accounted for on a quarterly basis that is equal to 2.1% of the gross retailing selling price to consumers for the Hang Ten Korea Licensed Items, whether sold directly by Hang Ten Korea or its franchisee, less any included VAT taxes and actual returns. For each of the years ended 31 March, 2001 and 2002, the royalties payable by Hang Ten Korea to the Hang Ten (BVI) Group amounted to approximately US$49,000 and US$633,000 respectively.

The Directors are of the view that the transactions under the Hang Ten Korea License Agreement have been entered into on normal commercial terms and in the ordinary and usual course of business of Hang Ten Korea and HTIL and are fair and reasonable as far as shareholders of Hang Ten, taken as a whole, are concerned.

Since such transactions will constitute transactions between a wholly-owned subsidiary of ILC and a non-wholly owned subsidiary of ILC following Closing and (i) they are entered into on normal commercial terms in the ordinary and usual course of business of such subsidiaries of ILC; and (ii) no connected person of Hang Ten is a substantial shareholder in Hang Ten Korea; such transactions fall within the category of transactions prescribed under Rule 14.24(4) of the Listing Rules and are exempted from the disclosure and shareholders’ approval requirements applicable to connected transactions under Chapter 14 of the Listing Rules.

(iii) Sales to and purchases from Global Inc.

A wholly-owned subsidiary of ILC has been selling apparels bearing the brandname of “Hang Ten” to Global Inc. for sales in Global Inc.’s retail outlets and purchasing clothing manufactured or sourced by Global Inc. since 2001 in its ordinary course of business. For each of the years ended 31 March 2001 and 2002, aggregate sales made Ð 77 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

by the Hang Ten ILC Group to Global Inc. amounted to approximately US$248,000 and US$332,000 respectively and aggregate purchases made by the Hang Ten (BVI) Group from Global Inc. amounted to US$854,000 and US$3,266,000 respectively.

Given that Global Inc. is an associate of Mr. Young Chang Lee, a director of Hang Ten Korea, a 92% owned subsidiary of Hang Ten upon listing of the Hang Ten Shares, Global Inc. will be treated as a connected person of Hang Ten under the Listing Rules. Accordingly, these transactions will constitute continuing connected transactions for Hang Ten under the Listing Rules following Closing.

The unit prices of such sales and purchases between the Hang Ten (BVI) Group and Global Inc. are determined on an arms-length basis, on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to Hang Ten than terms available to or from (as appropriate) independent third parties, on terms that are fair and reasonable as far as the interests of the shareholders of Hang Ten, taken as a whole, are concerned and will be entered into on a regular basis and in the ordinary course of business of the Hang Ten (BVI) Group. Accordingly, these transactions will constitute continuing connected transactions for Hang Ten under Rule 14.26 of the Listing Rules following Closing.

The Hang Ten (BVI) Group is expanding its operations in South Korea. Sales in the South Korean market in 2001 and 2002 amounted to US$2,321,000 and US$30,156,000 respectively. A significant portion of the products sold in South Korea are purchased from Global Inc. In 2001, total amount of purchases from Global Inc. amounted to approximately US$854,000. In 2002, purchases from Global Inc. amounted to approximately US$3,266,000 representing an increase of 282%. Based on the past experience of the Hang Ten (BVI) Group and its present intention to expand its Korean operations, the Hang Ten (BVI) Group has, for the purposes of the waiver from the requirements applicable to connected transactions, applied for a cap amount of purchases from Global Inc. of HK$60 million (equivalent to approximately US$7.7 million), an increase of about 130% over the purchases from Global Inc. for 2002.

Sales to Global Inc. increased from US$248,000 in 2001 to US$332,000 in 2002, an increase of over 35%. On the basis of the Hang Ten (BVI) Group’s past experience and its expanding sales in South Korea, the Hang Ten (BVI) Group has, for the purposes of the waiver from the requirements applicable to connected transactions, applied for a cap amount for sales to Global Inc. of HK$10,000,000 (equivalent to approximately US$1.2 million).

(g) License to Hang Ten (China)

Pursuant to a license agreement dated 28 March 2002 (“Hang Ten (China) License Agreement”) between ILC and Hang Ten (China) Group Limited (“Hang Ten (China)”), a company which is principally engaged in the PRC retailing business, ILC granted an exclusive license to

Ð 78 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Hang Ten (China) to use in the PRC the word “Hang Ten” and associated trade marks in the design, manufacturing, advertising, sale and promotion of clothing, footwear, headwear and other accessories (“Hang Ten (China) Licensed Items”). The Hang Ten (China) License Agreement is for a period of 5 years commencing from 1 April 2002, unless earlier terminated by ILC by reason of a default or insolvency of Hang Ten (China).

ILC is a member of the Hang Ten (BVI) Group. Hang Ten (China) was a wholly-owned subsidiary of ILC and was disposed of by ILC to Accurate Sino Developments Limited on 28 March 2002. Accurate Sino Developments Limited is a holding company in which the Investors collectively hold an indirect interest of approximately 97.01%. (Further details relating to this disposal are set out in the section headed “Corporate reorganisation” in Appendix VII to this document.) Accordingly, the transactions contemplated under the Hang Ten (China) License Agreement will constitute connected transactions for Hang Ten under the Listing Rules following Closing.

Pursuant to the Hang Ten (China) License Agreement, Hang Ten (China) is required to pay to ILC royalty accounted for on a quarterly basis that is equal to 2.5% of Hang Ten (China)’s actual gross retail selling price charged to consumers for Hang Ten (China) Licensed Items, whether sold directly by Hang Ten (China) or its franchisees, less any included VAT, taxes, commission given to agents or franchisees and actual returns (“Net Sales”). In addition, Hang Ten (China) is required to pay to ILC on a quarterly basis as advertising contribution a sum equal to 2.5% of Hang Ten (China)’s actual Net Sales. The Directors are of the view that the transactions under the Hang Ten (China) Agreement have been entered into on normal commercial terms and in the ordinary and usual course of business of the Hang Ten (BVI) Group and are fair and reasonable as far as shareholders of Hang Ten, taken as a whole are concerned.

Based on the method of calculation of the royalties and advertising contribution described above, the total annual royalty fee and advertising contribution receivable by ILC from Hang Ten (China) for any year during the term of the license are expected to exceed HK$1,000,000, but will not exceed HK$10,000,000. As such, the transactions under the Hang Ten (China) License Agreement will be disclosed in Hang Ten’s next published annual report and accounts in accordance with Rule 14.25(1)(A) to (D) of the Listing Rules after the listing of the Hang Ten Shares.

WAIVER AND CONDITIONS TO WAIVER

Under the Listing Rules, the sub-lease arrangements mentioned in paragraph (c) above, the sales to Hang Ten Phils., Corp. mentioned in paragraph (e)(i) above, the sales to and distribution by the substantial shareholders of Hang Ten Phils. mentioned in paragraph (e)(ii) above, the sales to and purchases from Global Inc. mentioned in paragraph (f)(iii) above and the transactions under the Hang Ten (China) License Agreement mentioned in paragraph (g) above (together referred to as the “Transactions”) would constitute “connected transactions” upon the listing of the Hang Ten Shares and the transactions mentioned in paragraphs (c) and (g) will be subject to the disclosure requirements pursuant to Rule 14.25 of the Listing Rules and the transactions mentioned in paragraphs (e)(i), e(ii) and (f) (iii) will be subject to the shareholders’ approval requirements pursuant to Rule 14.26 of the Listing Rules. Ð 79 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

The Directors have confirmed that the Transactions described above are carried out on normal commercial terms, determined on an arms’ length basis and in the ordinary course of business of the Hang Ten (BVI) Group and are fair and reasonable so far as shareholders of Hang Ten are concerned. These transactions are expected to continue. Based on the documents and information provided by the Hang Ten (BVI) Group, and the confirmation and representation by the Directors, the Sponsors are of the view that the Transactions described above have been entered into on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to Hang Ten than terms available to or from (as appropriate) independent third parties, on terms that are fair and reasonable as far as shareholders of Hang Ten, taken as a whole, are concerned.

As the Transactions will constitute continuing connected transactions for Hang Ten following Closing, the Directors are of the view that the disclosure and any shareholders’ approval requirements that normally apply to these transactions would be unduly burdensome and impractical for Hang Ten. Accordingly, an application has been made to the Stock Exchange for a waiver from (a) the disclosure requirements applicable to connected transactions under Rule 14.25 of the Listing Rules for the transactions mentioned in paragraphs (c) and (g) above; and (b) the shareholders’ approval requirements for each of the financial year up to 31 March 2005 applicable to connected transactions under Rule 14.26 of the Listing Rules for the transactions mentioned in paragraphs (e)(i), (e)(ii) and (f)(iii) above, and will be granted subject to the following conditions:

A. that each of the Transactions shall be:

(i) entered into by the Hang Ten Group in the ordinary and usual course of its business;

(ii) conducted on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to Hang Ten than terms available to or from (as appropriate) independent third parties; and

(iii) in accordance with the relevant agreement governing them on terms that are fair and reasonable and in the interests of the shareholders of Hang Ten as a whole.

B. the aggregate amount of the rental expense and income of the Hang Ten (BVI) Group pursuant to the sub-lease arrangement with Michel Rene for each financial year of Hang Ten shall not exceed HK$10,000,000 (the “Rental Cap Amount”), the aggregate amount of the sales to Hang Ten Phils., Corp. for each financial year up to 31 March 2005 shall not exceed HK$25,000,000 (the “Hang Ten Phils Sales Cap Amount”), the aggregate amount of the sales to and distribution by the substantial shareholders of Hang Ten Phils for each financial year of Hang Ten up to 31 March 2005 shall not exceed HK$40,000,000 (the “Phils Sales Cap Amount”), the aggregate amount of the purchases from Global Inc. for each financial year up to 31 March 2005 of Hang Ten shall not exceed HK$60,000,000 (the “Korea Purchase Cap Amount”), the aggregate amount of the sales to Global Inc. for each financial year of Hang Ten shall not exceed HK$10,000,000 (“Korea Sales Cap Amount”) and the aggregate amount of the royalties and advertising contribution received under the Hang Ten (China) License

Ð 80 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Agreement for each financial year of Hang Ten shall not exceed HK$10,000,000 (the “License Cap Amount”);

C. the independent non-executive Directors shall review the Transactions annually and confirm in Hang Ten’s next annual report that each of the Transactions was conducted in the manner as stated in paragraphs A and B above;

D. the auditors of Hang Ten shall review the Transactions annually and confirm in a letter (the “Letter”) to the Directors (a copy of which shall be provided to the Listing Division of the Stock Exchange) stating whether:

(i) each of the Transactions has received the approval of Hang Ten’s Board of Directors;

(ii) the Rental Cap Amount, the Hang Ten Phils Sales Cap Amount, the Phils Sales Cap Amount, the Korea Sales Cap Amount, the Korea Purchase Cap Amount and the License Cap Amount have not been exceeded;

(iii) are in accordance with the pricing policies of Hang Ten if the Transactions involve provision of goods or services by Hang Ten; and

(iv) have been entered into in accordance with the relevant agreement governing the Transactions.

Where, for whatever reason, the auditors decline to accept the engagement or are unable to provide the Letter, the Directors shall notify the Stock Exchange immediately.

E. details of the Transactions in each financial year shall be disclosed as required under Rule 14.25(1)(A) to (D) of the Listing Rules in the annual report of Hang Ten for that financial year together with a statement of the opinion of the independent non-executive Directors referred to in paragraph C above; and

F. Hang Ten (China) shall provide to the Stock Exchange an undertaking that, for so long as the Hang Ten Shares are listed on the Stock Exchange, it will provide the auditors of Hang Ten with full access to its records for the purpose of the auditors’ review of the Transactions referred to in paragraph D above.

If any terms of the Transactions as mentioned above are altered or if Hang Ten enters into any new agreements with any connected persons (within the meaning of the Listing Rules) in the future, Hang Ten will comply with the provisions of Chapter 14 of the Listing Rules governing connected transactions unless it applies for and obtains a separate waiver from the Stock Exchange.

In the event of any future amendments to the Listing Rules imposing more stringent requirements than those as at the Latest Practicable Date on transactions of the kind to which the Transactions belong, Hang Ten will take immediate steps to ensure compliance with such requirements within a reasonable time.

Ð 81 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

WAIVER APPLICATION IN ACCORDANCE WITH THE GUIDELINES (THE “GUIDELINES”) FOR ISSUERS WITH NEGATIVE OR NEGLIGIBLE NET TANGIBLE ASSETS AS SET FORTH IN THE ANNOUNCEMENTS BY THE STOCK EXCHANGE DATED 3 MAY 2001, 24 AUGUST 2001 AND 9 OCTOBER 2001

Reasons for the application

As disclosed in the audited combined balance sheet of the Hang Ten Group in Appendix II to this document, Hang Ten recorded an audited combined net asset value of US$17,853,000 (equivalent to about HK$139,253,400) as at 31 March 2002, which includes goodwill amounting to US$10,001,000 (equivalent to about HK$78,007,800) and intangible assets amounting to US$19,209,000 (equivalent to about HK$149,830,200). After excluding intangible assets, Hang Ten recorded audited combined net liabilities of US$11,357,000 (equivalent to about HK$88,584,600) as at 31 March 2002 which did not arise from operational losses.

As illustrated in the pro forma statement of adjusted combined net liabilities of the Hang Ten Group in Appendix III to this document, and taking account of the effects of the Proposal and certain adjustments since 31 March 2002, the unaudited adjusted combined net liabilities of the Hang Ten Group immediately following Closing will be US$7,300,000 (equivalent to about HK$56,940,000).

Based on this, the modified assets base of the Hang Ten Group amounted to US$31,133,000, being the gross assets of US$84,011,000 less intangibles of US$29,210,000 and current liabilities of US$27,725,000 of Hang Ten Group as at 31 March 2002 and after taking into account the adjustment of US$4,057,000 as stated in the pro forma statement of adjusted combined net liabilities of the Hang Ten Group in Appendix III to this document.

The Listing Rules impose certain disclosure and shareholders’ approval requirements in connection with transactions of a listed issuer. The applicability of these requirements depends on the size of the proposed transaction which is often assessed under the Listing Rules by reference to the net tangible assets of the listed issuer. As a consequence of Hang Ten’s negative net tangible assets position following Closing, virtually every transaction, irrespective of its size, would be subject to prior shareholders’ approval if the relevant provisions of the Listing Rules were to be strictly applied.

The Directors consider that these requirements would create difficulties for Hang Ten to continue its day-to-day operations and be impractical and unduly burdensome on the Hang Ten Group following the Introduction. The Directors also believe that strict adherence to the relevant requirements would result in significant and disproportionate costs to Hang Ten’s shareholders, as well as taking up valuable management time which could otherwise be focused on the business operations of the Hang Ten Group.

In view of the above and in accordance with the Guidelines, application has been made to the Stock Exchange for a limited waiver from strict compliance with the various provisions of the Listing Rules that will apply to Hang Ten following the Introduction and details of the application are set out below:

(a) De-minimis concession

Application has been made and approved by the Stock Exchange for the grant of a concession to Hang Ten (the “De-minimis Concession”) such that, following the Introduction, the “assets test”

Ð 82 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

and the “consideration test” under Rules 14.06, 14.09, 14.12 and 14.20 of the Listing Rules will not apply to each transaction carried out in the ordinary course of business of the Hang Ten Group, which is entered into on normal commercial terms, and where the consideration or value of the transaction does not exceed HK$1,000,000.

(b) Very substantial acquisitions, major transactions, discloseable transactions and share transactions

Application has been made and approved by the Stock Exchange for a modification to the calculation of the “assets test” and the “consideration test” as set out in Rules 14.09(1) and (3) of the Listing Rules respectively (“Modified Calculation Concession”) for the purposes of classifying notifiable transactions (other than connected transactions) of Hang Ten into categories of “very substantial acquisitions”, “major transactions”, “discloseable transactions” and “share transactions” (each as defined in the Listing Rules).

The Modified Calculation Concession will apply to modify the “asset test” and the “consideration test” in the following manner: (a) the “asset test” will be performed by dividing the gross assets less intangibles and current liabilities of the asset to be acquired or disposed of by the gross assets less intangibles and current liabilities of the Hang Ten Group; and (b) the “consideration test” will be performed by dividing the consideration for the asset to be acquired or disposed of by the gross assets less intangibles and current liabilities of the Hang Ten Group, and

the following percentage ratios arising from the modified tests described above will be used to determine the applicable disclosure or approval requirements for Hang Ten:

(a) in cases of a ratio of 5% (being approximately US$1,556,650) or above but below 15% (being approximately US$4,669,950), the requirements for discloseable transactions will apply to Hang Ten;

(b) in cases of a ratio of 15% (being approximately US$4,669,950) or above but below 25% (being approximately US$7,783,250), the requirements for major transactions will apply to Hang Ten in respect of any acquisition;

(c) in case of a ratio of 15% (being approximately US$4,669,950) or above, the requirements for major transactions will apply to Hang Ten in respect of any disposal;

(d) in cases of a ratio of 25% (being approximately US$7,783,250) or above, the requirements for very substantial acquisitions will apply to Hang Ten in respect of any acquisition; and

(e) for acquisition of assets (including securities but excluding cash) for a consideration that includes securities for which listing will be sought, the requirements for share transactions will apply to Hang Ten if the ratio is less than 5% (being approximately US$1,556,650).

The Modified Calculation Concession based on the above ratios will apply only to the “assets test” and the “consideration test”, both as modified in the manner described above. The “profit test” and the “equity test” set out in Rules 14.09(2) and (4) of the Listing Rules will remain applicable to Hang Ten following the Introduction.

Ð 83 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Application has been made and approved by the Stock Exchange for the adoption a modified assets base of the Hang Ten Group in substitution for the net tangible assets used in Rules 14.24(5), 14.25(1) and 14.25(2)(b)(i) of the Listing Rules for the purpose of categorising connected transactions of Hang Ten as prescribed under these rules.

The modification applies such that references to “net tangible assets” under those rules will, in the case of Hang Ten following the Introduction, be construed to mean the “gross assets less intangibles and current liabilities of the Hang Ten Group” (the “Modified Assets Base”). The Modified Assets Base of the Hang Ten Group is equal to approximately US$31,133,000.

On the basis of the adoption of the Modified Assets Base under those rules, the percentage ratio thresholds set out below will apply to Hang Ten to determine the applicable disclosure and/or shareholders’ approval requirements for its connected transactions following the Introduction:

(a) in respect of Rule 14.24(5) of the Listing Rules, the threshold will be the higher of (i) HK$1,000,000 or (ii) 0.01% of the Modified Assets Base (being approximately US$3,113);

(b) in respect of Rule 14.25(1) of the Listing Rules, the threshold will be the higher of (i) HK$10,000,000 or (ii) 1% of the Modified Assets Base (being approximately US$311,330); and

(c) in respect of Rule 14.25(2)(b)(i) of the Listing Rules, the threshold will be 5% of the Modified Assets Base (being approximately US$1,556,650).

(d) Major Subsidiary

Application has been made and approved by the Stock Exchange to apply the Modified Assets Base in order to classify a “major subsidiary” of Hang Ten following the Introduction for the purpose of determining the applicable disclosure and/or shareholders’ approval requirements imposed on Hang Ten under various provisions of the Listing Rules.

The modification applies such that references to “net tangible assets” in the following rules will, in the case of Hang Ten following the Introduction, be replaced by references to the Modified Assets Base:

(a) paragraph 17(2) of Appendix 7B to the Listing Rules;

(b) paragraph 5.1 of Practice Note 13 of the Listing Rules; and

The current percentage ratios prescribed under these rules will continue to apply to Hang Ten notwithstanding the adoption of the Modified Assets Base in these rules.

Ð 84 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

(e) Practice Note 19 of the Listing Rules

Application has been made and approved by the Stock Exchange to apply the Modified Assets Base in substitution for the “net assets” used in Practice Note 19 of the Listing Rules for the purpose of determining the general disclosure obligation of Hang Ten following the Introduction as prescribed under that practice note.

The modification applies such that references to “net assets” in the following paragraphs of Practice Note 19 of the Listing Rules will, in the case of Hang Ten following the Introduction, be replaced by references to the Modified Assets Base.

(a) paragraph 1.3;

(b) paragraph 3.2.1;

(d) paragraph 3.3.

On the basis of the adoption of the Modified Assets Base under those paragraphs, the percentage ratio thresholds set out below will apply to Hang Ten to determine whether a general disclosure obligation will arise for Hang Ten under Practice Note 19 following the Introduction:

(a) in respect of paragraph 3.2.1, a ratio of 8%;

(b) in respect of paragraph 3.2.2, a ratio of 3%; and

Conditions to the limited waiver

The granting of the limited waiver as set out in this section is subject to the following conditions:

(a) Details of the De-mmimis Concession, the Modified Calculation Concession and the other modifications granted under the limited waiver have been disclosed in this document and, if required, will be disclosed in a paid announcement of Hang Ten following the granting of such waiver or the despatch of this document. These details will include the relevant value or percentage thresholds, as the case may be, the basis for applying for such modifications and the period during which Hang Ten is entitled to use the modified sets of tests.

(b) The same details will be included in Hang Ten’s next published annual report and accounts.

(c) The approved De-minimis Concession, Modified Calculation Concession and the other modifications granted under the limited waiver are only valid from the date of approval to the publication or the due date for publication of the next annual report of Hang Ten, whichever is earlier. Ð 85 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

SHAREHOLDINGS

The shareholdings in Akai and Hang Ten before and after completion of the Proposal will be as follows:

THE INVESTORS The Kung Family (Notes 1 &3) Asian Wide Ð Ð 12,600 46.49% 56,940 58.41% 59,460.00 58.36% Kenneth Hung Ð Ð 800 2.94% 3,620 3.71% 3,780.00 3.71% Dennis Kung Ð Ð 400 1.48% 1,810 1.86% 1,890.00 1.86% Peggy Hung Ð Ð 400 1.48% 1,810 1.86% 1,890.00 1.86% Pamela Hung Ð Ð 400 1.48% 1,810 1.86% 1,890.00 1.86%

YGM (Note 3) Ð Ð 5,000 18.45% 22,590 23.18% 23,590.00 23.15%

Ms. Kao (director of Hang Ten) (Note 3) Ð Ð 200 0.74% 900 0.92% 940.00 0.92% Ms. Wang (director of Hang Ten) (Note 3) Ð Ð 200 0.74% 900 0.92% 940.00 0.92%

Sub-total Ð Ð 20,000 73.80% 90,380 92.72% 94,380.00 92.64%

OTHER INVESTORS (Notes 2 & 3) Best Standand Ð Ð 1,993 7.36% 1,993 2.05% 2,085.60 2.06% Raytop Ð Ð 1,507 5.56% 1,507 1.54% 1,576.40 1.54%

DESIGNATED PERSON (Note 3) Ð Ð 1,200 4.43% 1,200 1.23% 1,440.00 1.41%

AKAI SHAREHOLDERS 2,191 100.00% 300 1.10% 300 0.31% 300.00 0.29%

LIQUIDATORS (for the benefit of the Creditors) Ð Ð 2,100 7.75% 2,100 2.15% 2,100.00 2.06%

Sub-total 2,191 100.00% 7,100 26.20% 7,100 7.28% 7,502.00 7.36%

Total 2,191 100.00% 27,100 100.00% 97,480 100.00% 101,882.00 100.00%

Ð 86 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

Sub-total Ð Ð 24,700 91.15% 95,080 97.54% 99,482 97.65%

Akai Shareholders 2,191 100.00% 300 1.10% 300 0.31% 300 0.29%

Liquidators (for the benefit of the Creditors) Ð Ð 2,100 7.75% 2,100 2.15% 2,100 2.06%

Total 2,191 100.00% 27,100 100.00% 97,480 100.00% 101,882 100.00%

Ð 87 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED

LISTING ON THE STOCK EXCHANGE OF, BOARD LOTS OF AND CERTIFICATES FOR, HANG TEN SHARES

Application has been made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Hang Ten Shares in issue and to be issued as mentioned in this document and any Hang Ten Shares which may fall to be issued pursuant to the conversion of the CPS and the exercise of the Warrants and any Options up to 10% of the issued ordinary share capital of Hang Ten upon listing that may be granted.

No share or loan capital of Hang Ten is listed or dealt in on any other stock exchange. Hang Ten is not seeking or proposing to seek listing of or permission to deal in its securities on any other stock exchange.

The Stock Exchange has also stated that, following the listing of Hang Ten Shares, any acquisitions or disposals by Hang Ten will be subject to the provisions of the Listing Rules. Under the Listing Rules, the Stock Exchange has a discretion to require Hang Ten to issue an announcement and/or a circular to its shareholders when any acquisition or disposal by Hang Ten is proposed, irrespective of the size of such acquisition or disposal and, in particular, when such acquisition or disposal represents a departure from the principal activities of the Hang Ten Group following the implementation of the Proposal. The Stock Exchange also has the power, pursuant to the Listing Rules, to aggregate a series of acquisitions or disposals by Hang Ten and any such acquisitions or disposals may in any event result in Hang Ten being treated as a new applicant for listing.

Subject to the granting of the listing of, and permission to deal in, the Hang Ten Shares on the Stock Exchange (as well as compliance with the stock admission requirement of HKSCC), Hang Ten Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Hang Ten Shares or such other date as may be determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. All necessary arrangements have been made for the Hang Ten Shares to be admitted into CCASS.

Upon the Scheme becoming effective, certificates representing the Akai Shares will cease to have effect for any purpose and the listing of the Akai Shares on the Stock Exchange will be cancelled. Certificates representing the appropriate number of Hang Ten Shares will be issued to the Akai Shareholders on the register of members of Akai at the Final Record Date. Persons entitled to Akai Shares who are not registered holders thereof should make an application to the Courts as soon as possible to effect a transfer of the relevant Akai Shares and should ensure that the appropriate form of transfer accompanied by the relevant certificates or other evidence of title are submitted to the share registrar of Akai in the manner described in the section headed “Record Date” set out in the Explanatory Statement.

It is expected that certificates for the Hang Ten Shares will be posted to the holders of Akai Shares entitled thereto at their own risk on the next day following the Effective Date. Certificates will be posted to the holders of Akai Shares entitled thereto at their respective registered addresses set out in the

Ð 88 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED register of members of Akai (or, in the case of joint holders, at the address of that joint holder whose name stands first in the register of members of Akai in respect of the joint holding) at the Final Record Date.

The proposed board lot for trading in the Hang Ten Shares on the Stock Exchange is 100,000.

UNDERTAKINGS

Each member of the Kung Family (being the controlling shareholder of Hang Ten upon Closing but before conversion of the CPS held by the Investors or exercise of the Warrants) and its shareholders has undertaken to Hang Ten and the Stock Exchange that each member of the Kung Family will not:

(a) for six months from the date on which dealing in the Hang Ten Shares commences on the Stock Exchange, dispose of, or procure its associates or nominee holders to dispose of, any of the Hang Ten Shares beneficially owned by it immediately after Closing; and

(b) in the six months following the expiry of the period referred to in (a) above, dispose of, or permit its associates or nominee holders to dispose of, any of the Hang Ten Shares referred to in (a) above if, immediately after such disposal, it would cease to be the controlling shareholder of Hang Ten (as defined in the Listing Rules).

(a) if any Hang Ten Shares beneficially owned by it are pledged or charged, immediately inform Hang Ten of such pledge or charge and the number of Hang Ten Shares so pledged or charged; and

(b) on receipt of indications, whether verbal or written, from the pledgee or chargee that any of the pledged or charged Hang Ten Shares will be disposed of, immediately inform Hang Ten.

In compliance with Note 3 to Rule 10.07 of the Listing Rules, Hang Ten will inform the Stock Exchange as soon as it has been informed of the above matters by each member of the Kung Family and will disclose such information by way of a press notice as soon as possible.

Hang Ten has undertaken to the Stock Exchange that it will not, save for (a) implementation of the Proposal, (b) the grant of options under the Share Option Scheme, (c) the exercise of subscription rights attached to any Option granted under the Share Option Scheme; (d) the issue of Hang Ten Shares by way of scrip dividend schemes or similar arrangements in accordance with the Bye-laws of Hang Ten; or (e) the issue of Hang Ten Shares pursuant to the conversion of the CPS or exercise of the Warrants (i) within the period of six months from the date of commencement of dealing in the Hang Ten Shares on the Stock Exchange, issue or agree to issue any shares or securities in Hang Ten or grant or agree to grant any

Ð 89 Ð LETTER FROM THE BOARD OF DIRECTORS OF HANG TEN GROUP HOLDINGS LIMITED options, warrants or other rights carrying the right to subscribe for, or otherwise convert into, or exchange for any securities of Hang Ten; and (ii) at any time during the period of 12 months from the date of commencement of dealing in the Hang Ten Shares on the Stock Exchange, issue or exchange for any options or rights to subscribe for or otherwise convert into or exchange for the Hang Ten Shares or securities in Hang Ten so as to result in the Kung Family ceasing to be the controlling shareholder of Hang Ten (within the meaning of the Listing Rules).

Hang Ten has undertaken to the Stock Exchange, subject to the Closing, to disclose to the Stock Exchange any dealings by any connected persons (as defined in the Listing Rules) of Hang Ten from time to time in the CPS and the Warrants immediately upon Hang Ten becoming aware of such dealings.

To comply with the requirements pursuant to Paragraph 30 of Appendix 7(b) to the Listing Rules, the Directors have undertaken that they will procure that Hang Ten proceeds with a consolidation of Hang Ten Shares in the event that Hang Ten Shares traded at a closing price of HK$0.01 or below for 90 consecutive trading days from the date of listing or such other period as the Stock Exchange may reasonably consider to be appropriate under Paragraph 30 of Appendix 7(b) of the Listing Rules. The Investors have also undertaken to the Stock Exchange that each of them will support and approve any share consolidation that may be required under Paragraph 30 after the listing of the Hang Ten Shares on the Stock Exchange so as to fulfil the above undertaking given by the Directors.

ARRANGEMENTS FOR ODD LOT TRADING OF THE HANG TEN SHARES

The proposed board lot for trading in the Hang Ten Shares on the Stock Exchange is 100,000. In order to alleviate the difficulties arising from the existence of odd lots of the Hang Ten Shares as a result of the Proposal, Hang Ten has agreed to arrange to match the sales and purchases of odd lots of the Hang Ten Shares but it should be noted that any such sales and purchases may be transacted at a price less than the prevailing market price of the Hang Ten Shares. Holders of odd lots of the Hang Ten Shares who wish to take advantage of this facility should contact Ms. Amy Wu (Telephone: 2532 8227) or Ms. Sandy Yuen (Telephone: 2532 8226), Kim Eng Securities (Hong Kong) Limited at Room 1901, 19/F, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong from 9 December 2002 up to and including 8 January 2003.

OTHER INFORMATION

Your attention is drawn to the “Letter from the joint and several Liquidators of Akai Holdings Limited (In Compulsory Liquidation)”, the “Letter from Horwath”, the “Explanatory Statement” and the appendices to this document.

Yours faithfully, For and on behalf of Hang Ten Group Holdings Limited Chan Wing Sun Chairman

Ð 90 Ð LETTER FROM HORWATH CAPITAL ASIA LIMITED

31 October 2002

To the shareholders of Akai Holdings Limited (In Compulsory Liquidation)

Dear Sirs,

PROPOSAL

We refer to our appointment to advise you as regards the Proposal, which involves, inter alia, the Scheme, details of which are set out in Akai’s document (the “Document”) to Akai Shareholders dated 31 October 2002 of which this letter forms part. Unless the context requires otherwise, terms used in this letter shall have the same meaning as those defined in the Document.

In formulating our advice, we have relied upon the accuracy of the information and representations contained in the Document. We have assumed that all statements and representations made or referred to in the Document were true at the time they were made and continue to be true as at the date of the Document. We have assumed that all statements of belief, opinion and intention made by the Liquidators and the Directors in the Document have been reasonably made after due enquiry.

We consider that we have reviewed sufficient information to reach an informed view, to justify our reliance on the accuracy of the information contained in the Document and to provide a reasonable basis for our advice. The Liquidators have confirmed to us that in so far as the Akai Group is concerned, no material facts have been omitted from the information supplied and opinions expressed and we have no reason to suspect that any material information relating to the Akai Group has been withheld by the Liquidators or is misleading. We have not, however, conducted an independent in-depth investigation into the affairs of the Akai Group or the prospects of the industry sector proposed by Hang Ten.

1. PRINCIPAL FACTORS AND REASONS CONSIDERED

In considering whether or not the terms of the Proposal are fair and reasonable so far as the interests of the Akai Shareholders are concerned, we have given particular regard to the following principal factors and reasons:

A. Background of Akai and Appointment of the Liquidators

As stated in the letter from the Liquidators contained in the Document, (i) on 23 August 2000, the Hong Kong Court ordered that Akai be wound-up and appointed the Official Receiver as provisional liquidator of Akai; (ii) on 24 May 2001, the Liquidators were appointed as the joint and several liquidators of Akai by the Hong Kong Court; (iii) on 28 August 2000 and 1 September 2000, the Bermuda Court appointed Fan Wai Kuen, Joseph, R. Craig Christensen and Damien Hodgkinson as joint and several provisional liquidators of Akai; (iv) on 29 September 2000, the

Ð 91 Ð LETTER FROM HORWATH CAPITAL ASIA LIMITED

Bermuda Court ordered that Akai be wound up; and (v) on 16 March 2001, the Liquidators were appointed as the joint and several liquidators of Akai by the Bermuda Court.

Trading in Akai Shares on the Stock Exchange has been suspended since 23 August 2000 and, on 10 September 2001, Akai was placed into the third stage of the delisting procedure. On 28 February 2002, Akai submitted the Proposal to the Stock Exchange and requested an extension for the cancellation of the listing of the Akai Shares. On 8 March 2002, the Stock Exchange gave in- principle approval to the Proposal and advised Akai that the Listing Committee had approved the extension for the cancellation of the listing of the Akai Shares up to 17 July 2002, to enable the Proposal to be progressed. On 12 July 2002, the Stock Exchange advised that the Listing Committee had approved the extension for the cancellation of the listing of the Akai Shares up to 29 November 2002. On 23 October 2002, the Stock Exchange advised Akai that the Listing Committee had approved a further extension for the cancellation of the listing of the Akai Shares up to 22 January 2003 to enable Akai to proceed with the Proposal and the new listing application of Hang Ten under the Proposal.

The Proposal involves a number of inter-related transactions, including the Scheme. Under the terms of the Scheme, Akai Shareholders on the Final Record Date will exchange their Akai Shares for an aggregate of 300,000,000 Hang Ten Shares which will be distributed among the Akai Shareholders pro rata in accordance with their respective holdings of Akai Shares (subject to rounding down) held on the Final Record Date. The Liquidators consider that the listing of the Akai Shares on the Stock Exchange has an intrinsic value that is capable of being realised. The realisation of value from the listing of a company’s shares on the Stock Exchange is different to other assets realised in an insolvent winding-up in that shareholders of an insolvent company can obtain a benefit from their co-operation in the realisation of value from the listed status of a company’s shares through a scheme of arrangement that facilitates a listing of another company’s shares by way of introduction.

It is the opinion of the Liquidators that:

(a) it is highly unlikely that Akai Shareholders will receive a distribution in Akai’s winding- up;

(b) the Stock Exchange will not consider an alternative resumption proposal; and

(c) the successful implementation of the Proposal will not affect the rights of Creditors and Akai Shareholders to make Claims in the winding-up of Akai.

The Liquidators are also of the view that the successful implementation of the Proposal is in the best interests of Akai Shareholders as it represents their only realistic prospect of realising any value from their Akai Shares. Since the Stock Exchange will not consider an alternative resumption proposal, the Proposal is the only option currently available to the Akai Shareholders. We consider that the Proposal is in the interests of Akai Shareholders.

Ð 92 Ð LETTER FROM HORWATH CAPITAL ASIA LIMITED

B. Value of Akai to Akai Shareholders

(a) As detailed in the explanatory statement contained in the Document, the Liquidators took into their custody the limited number of assets, books and records of the Akai Group which were identifiable and made available to them following their appointment. Due to the inadequate information available to the Liquidators, their investigations of the Akai Group have been severely restricted. Consequently, at this stage, it is not known whether the proceeds from the realisation of the Akai Group’s assets will provide any return to Creditors. At present, there are few tangible assets under the control of the Liquidators. A number of legal claims against various parties have been identified by the Liquidators. As at the Latest Practicable Date, it is not known whether these claims are worth pursuing as there are insufficient funds available to the Liquidators to undertake the necessary investigations or to obtain legal advice. Given the lack of funds and limited information available to the Liquidators, as at the Latest Practicable Date the Liquidators were unable to estimate with any degree of certainty what, if any, realisations may be available from the winding-up of Akai. However, if the Proposal is successfully implemented, there will be gross realisations of HK$12,000,000 in cash and the proceeds of sale of the Creditors’ Share Allocation which will be the first material realisations in the winding-up of Akai.

(b) As at the Latest Practicable Date, the Liquidators have received proofs of debt with claims in aggregate in the amount of HK$9,855,359,252, in respect of the winding-up in Hong Kong and HK$8,975,675,776 in respect of the winding-up in Bermuda. However, the Liquidators have not yet completed their adjudication of the Claims.

(c) The Statement of Affairs of Akai as at 23 August 2000 is set out in Appendix V to the Document. As at that date, Akai had estimated total deficiency before the cost of liquidation in excess of US$787 million. Given the realisation proceeds estimated by the Liquidators as mentioned in paragraph (a) above and the estimated total deficiency before the cost of liquidation of Akai as stated in the Statement of Affairs, it would, in our opinion, be highly unlikely for the Creditors, even if the Proposal is implemented, to receive a complete discharge of their Claims after paying off the costs and expenses of the liquidation of Akai, which have been approximately HK$26.9 million as at the Latest Practicable Date, excluding those restructuring costs in connection with the Proposal. Accordingly, in our opinion, regardless of whether or not the Scheme is implemented, it is highly unlikely that Akai Shareholders will receive a dividend in Akai’s winding-up.

(d) Akai and its subsidiaries have ceased to carry all major businesses on 23 August 2000 (the date of the winding-up order of the Hong Kong Court). Without injection of new profitable business into Akai, there is no viable business that could generate future income to restore shareholder value for the Akai Shareholders. In view of the substantial total deficiency of Akai of approximately US$787 million as shown in the Statement of Affairs, it appears to us that the only shareholder value that Akai could have for the Akai Shareholders would be a rescue of its listed status, through a reactivation proposal similar to the Proposal to inject new profitable business into Akai by an interested rescuer. Ð 93 Ð LETTER FROM HORWATH CAPITAL ASIA LIMITED

(e) Trading in the Akai Shares on the Stock Exchange has been suspended since 23 August 2000. In view of the fact that Akai is in liquidation, in our opinion, it is highly inconceivable that suspension of trading of the Akai Shares could be uplifted without a Proposal that would, among other approvals and consents, meet the relevant regulatory requirements. Upon the Scheme becoming effective and subject to the listing of the Hang Ten Shares, the Akai Shareholders will become shareholders of Hang Ten and will receive the Hang Ten Shares in exchange for the Akai Shares presently held by them pursuant to the Scheme. The Hang Ten Shares will be marketable on the Stock Exchange. In this respect, we consider the Scheme, which will effectively realise some value for the Akai Shareholders, to be in interests of the Akai Shareholders.

C. The Terms of the Proposal

The Proposal principally involves the following transactions:

(a) The Scheme

Pursuant to the Scheme, the entire issued share capital of Akai will be transferred to Hang Ten. The Akai Shareholders on the Final Record Date will transfer all of their Akai Shares to Hang Ten. In consideration of this transfer, Akai Shareholders on the Final Record Date will receive in aggregate 300,000,000 Hang Ten Shares, credited as fully paid up, to be distributed among Akai Shareholders pro rata in accordance with their respective holdings of Akai Shares (subject to rounding down) held on the Final Record Date. Subject to the approval of the Stock Exchange, listing of the Akai Shares will be withdrawn from the Stock Exchange and the Hang Ten Shares will be listed on the Stock Exchange by way of Introduction.

Based on the Unaudited Pro Forma Statement of Adjusted Combined Net Liabilities of the Hang Ten Group as set out in Appendix III to the Document, the pro forma unaudited adjusted combined net liabilities of the Hang Ten Group immediately following Closing will be approximately US$7.3 million. However, adding back the goodwill and intangible assets of the Hang Ten Group, the pro forma unaudited adjusted combined net asset value of the Hang Ten Group immediately following Closing will be approximately US$21.9 million (equivalent to approximately US cent 0.08 per Hang Ten Share). Accordingly, the Hang Ten Shares to be allotted and issued to the Akai Shareholders will have an attributable net asset value of approximately US$0.24 million (the “Attributable NAV”).

The issued and paid up capital of Akai as at 23 August 2000 as shown in the Statement of Affairs set out in Appendix V to the Document amounted to approximately US$28 million. On this basis and taking no account of any future changes in the capital value of the Hang Ten Shares on the Stock Exchange, the Akai Shareholders would be able to recover share value equivalent to approximately 78% of their paid up capital in Akai.

Given the impoverished financial performance and the substantial net deficiency of the Akai Group, we consider that the Scheme is in the interests of the Akai Shareholders due to the share value recovery that may be obtained by them. Ð 94 Ð LETTER FROM HORWATH CAPITAL ASIA LIMITED

(b) The Debt Restructuring

Hang Ten will:

(i) pay to Akai cash consideration of HK$12,000,000, financed by the net proceeds to be derived from the subscription of new shares in Hang Ten (BVI) by the Other Investors; and

On the Closing Date, Hang Ten will transfer all of the Akai Shares to the Liquidators (or their nominees) for the sum of HK$1.00. As such, the indebtedness of Akai due to the Creditors will still remain and be under the control of the Liquidators. The indebtedness of Akai will not therefore have any impact on the affairs of Hang Ten.

Taking into consideration the financial predicament of Akai, we consider that the Debt Restructuring and the transfer of the entire issued share capital of Akai to the Liquidators (or their nominees) are in interests of the Akai Shareholders as the indebtedness of Akai will be detached from the Hang Ten Group.

In Akai’s winding-up, the Akai Shareholders would receive a distribution only if all the Creditors had been paid in full. In view of the significant amount of the net deficit of Akai, we consider that it is improbable that the Akai Shareholders will be able to obtain any recovery. In the circumstances, we consider that the transfer to Hang Ten of the entire issued share capital of Akai by the Akai Shareholders and, immediately thereafter, by Hang Ten to the Liquidators (or their nominees) to be fair and reasonable.

On 28 October 2002, Hang Ten entered into the Sale and Purchase Agreement under which it will acquire the entire issued share capital of Hang Ten (BVI) from the Investors and the Other Investors. The consideration to the Investors will be satisfied by 21,200,000,000 Hang Ten Shares credited as fully paid (with one Warrant for every five Hang Ten Shares) and 7,038 CPS to the Investors. The Warrants will be issued on the Closing Date. A total of 4,402,000,000 Hang Ten Shares will be issued on exercise of the Warrants, representing approximately 18.03% of the issued ordinary share capital of Hang Ten immediately after such Warrants are issued. Out of the 21,200,000,000 Hang Ten Shares, the Investors will direct Hang Ten to issue and allot 1,200,000,000 Hang Ten Shares (with associated Warrants) to the Designated Person in consideration of consultancy services provided by the Designated Person to the Investors in relation to the restructuring of Akai.

Ð 95 Ð LETTER FROM HORWATH CAPITAL ASIA LIMITED

Completion of the Sale and Purchase Agreement will take place on or before the Closing Date.

Upon Closing with no CPS issued to the Investors converted or Warrants exercised, the Investors together with parties acting in concert with them will in aggregate hold approximately 91.15% of Hang Ten’s entire issued ordinary share capital. The shareholding interests in Hang Ten to be held by the Investors together with parties acting in concert with them will be increased to approximately 97.54% upon Closing with all CPS issued to the Investors converted but before exercise of the Warrants. The shareholding interests in Hang Ten to be held by the Investors together with parties acting in concert with them will be further increased to approximately 97.65% upon Closing with all CPS issued to the Investors converted and all Warrants exercised. We consider that it is fair for the Investors to obtain control and become the largest group of shareholders of Hang Ten upon Closing as the Investors, like any other arm’s length investors, would sell the entire issued share capital of Hang Ten (BVI) to Hang Ten in accordance with the abovementioned terms only if they could obtain a return sufficiently worthy as in the form of taking substantial and effective control of Hang Ten.

Ð 96 Ð LETTER FROM HORWATH CAPITAL ASIA LIMITED

D. Effects of the Proposal

(a) Shareholding

The Akai Shareholders will cease to have any shareholding in Akai upon the Scheme becoming effective, but they will become Hang Ten Shareholders upon completion of the Scheme. Their shareholding in Akai before Closing and in Hang Ten upon Closing, conversion of all CPS and exercise of all Warrants will be as follows:

YGM (Note 3) Ð Ð 5,000 18.45% 22,590 23.18% 23,590.00 23.15%

Ms. Kao (director of Hang Ten) (Note 3) Ð Ð 200 0.74% 900 0.92% 940.00 0.92% Ms. Wang (director of Hang Ten) (Note 3) Ð Ð 200 0.74% 900 0.92% 940.00 0.92%

Sub-total (A) Ð Ð 20,000 73.80% 90,380 92.72% 94,380.00 92.64%

OTHER INVESTORS (Notes 2 & 3) Best Standand Ð Ð 1,993 7.36% 1,993 2.05% 2,085.60 2.06% Raytop Ð Ð 1,507 5.56% 1,507 1.54% 1,576.40 1.54%

Ð 97 Ð LETTER FROM HORWATH CAPITAL ASIA LIMITED

DESIGNATED PERSON (Note 3) Ð Ð 1,200 4.43% 1,200 1.23% 1,440.00 1.41%

Sub-total (B) Ð Ð 4,700 17.35% 4,700 4.82% 5,102.00 5.01%

Sub-total (A+B) Ð Ð 24,700 91.15% 95,080 97.54% 99,482.00 97.65%

AKAI SHAREHOLDERS 2,191 100.00% 300 1.10% 300 0.31% 300.00 0.29%

LIQUIDATORS (for the benefit of the Creditors) Ð Ð 2,100 7.75% 2,100 2.15% 2,100.00 2.06%

Sub-total (C) 2,191 100.00% 2,400 8.85% 2,400 2.46% 2,400.00 2.35%

Total (A+B+C) 2,191 100.00% 27,100 100.00% 97,480 100.00% 101,882.00 100.00%

Ð 98 Ð LETTER FROM HORWATH CAPITAL ASIA LIMITED

The Akai Shareholders currently hold 100% of the issued share capital of Akai. Immediately upon Closing with no CPS issued to the Investors converted or Warrants exercised, the Akai Shareholders will hold approximately 1.10% of the issued ordinary share capital of Hang Ten. Such shareholding will be diluted to approximately 0.31% upon Closing with all CPS issued to the Investors converted but before exercise of the Warrants and further diluted to approximately 0.29% upon Closing with all CPS issued to the Investors converted and all Warrants exercised. The decrease in such shareholding is principally due to the issue of the Hang Ten Shares to the Creditors, the Investors, the Designated Person and the Other Investors.

We consider that the degree of shareholding dilution for the Akai Shareholders, although significant, is fair and reasonable, bearing in mind that it will be very improbable that the Investors and the Creditors would proceed with the Proposal if the above shareholding structure cannot be attained. Should the Proposal not proceed, it will be highly unlikely for the Akai Shareholders to receive a distribution in Akai’s winding-up.

(b) Net Assets and Capital Value

Based on the Statement of Affairs as set out in Appendix V to the Document, the total deficiency before the cost of liquidation of Akai was approximately US$787 million as at 23 August 2000. As at the Latest Practicable Date the Liquidators were unable to estimate with any degree of certainty what, if any, realisations may be available from the winding-up of Akai. Under these circumstances, the value of net assets of Akai potentially available to the Akai Shareholders without the Proposal is nil.

Again, should the Proposal not be implemented, the market capitalisation of the Akai Shares will most likely be nil.

On the other hand, based on the pro forma unaudited adjusted combined net asset value of the Hang Ten Group of approximately US$21.9 million upon Closing and the Hang Ten Shares to be issued to the Akai Shareholders pursuant to the Scheme, the Attributable NAV of approximately US$0.24 million would be conferred upon the Akai Shareholders as referred to in paragraph 1C(a) above.

The Akai Group’s major operations ceased in 2000 and no material earnings have been recorded since Akai’s liquidation. For the three years ended 31st March 2000, 2001 and 2002, the Hang Ten Group recorded profits attributable to shareholders of approximately US$10.9 million, US$10.9 million and US$8.6 million respectively as set out in Appendix II to the Document. Accordingly, it is very likely that the Akai Shareholders who will become shareholders of Hang Ten will benefit from the earnings of the Hang Ten Group through their shareholding in Hang Ten after the implementation of the Proposal.

Ð 99 Ð LETTER FROM HORWATH CAPITAL ASIA LIMITED

Since the Proposal would bring to the Akai Shareholders benefits in terms of the net asset value, capital value and earnings, we consider that the Proposal is in the interests of the Akai Shareholders.

E. Business of the Hang Ten Group

Hang Ten was incorporated in Bermuda on 17 July 2002 and, on completion of the Sale and Purchase Agreement, will be an investment holding company whose principal asset is its interest in the entire issued share capital of Hang Ten (BVI). Hang Ten (BVI) was incorporated on 10 September 2001 in the British Virgin Islands and is an investment holding company whose principal asset is its 97.01% equity interest in ILC.

The Hang Ten (BVI) Group is principally engaged in the business of designing, marketing and sale of apparel and accessories under the brandname of “Hang Ten” in Asian countries including Taiwan, South Korea, Singapore, Philippines and Malaysia. The portfolio of the apparel under the brandname of “Hang Ten” comprises jackets, vests, T-shirts, skirts, pants and jeans as well as other accessories such as bags, caps, socks, shoes, belts and umbrellas, which are targeted at customers aged between 15 and 45. The Directors believe that “Hang Ten” is one of the leading brand names for money-for-value apparel and accessories in the Asian region. The Hang Ten (BVI) Group is the owner of the trademark “Hang Ten” which is also licensed to independent third parties for distribution and production of apparel and accessories in over 50 countries, including the US, Europe, Japan, Australia, South America and South Africa. In addition, Hang Ten (BVI) Group also owns the trademarks “Lightning Bolt” and “OZZY”. Further details of the Hang Ten (BVI) Group’s intellectual property rights are set out in the paragraph headed “Intellectual property rights” in the section headed “Statutory and general information on Hang Ten Group Holdings Limited” in Appendix VII to this document. As shown in note 12 to the Combined Audited Financial Statements as set out in Appendix II to the Document, the net book value of the trademarks as at 31 March 2002 was approximately US$19.2 million. The Hang Ten (BVI) Group operates a retail network of over 300 outlets in the Asian region. The Hang Ten (BVI) Group is also engaged in the wholesaling of products bearing the brandname “Hang Ten” through a number of authorised local distributors in Taiwan. The Directors believe that there will be no change in the nature of the business of the Hang Ten (BVI) Group upon the listing of the Hang Ten Shares.

As stated in the letter from the board of directors of Hang Ten contained in the Document, the Directors believe that the Asian market for apparel and accessories is large and consider that the Hang Ten Group’s business strategy of offering distinctive, contemporary and quality merchandise to a specialised market segment presents the Hang Ten Group with opportunities for future growth. The Hang Ten Group’s objective is to become a well-known brand for apparel and accessories in the Asian region, offering a wide range of quality merchandise to different market segments. The Directors believe that in order to achieve the above business objective and maintain its competitive edge in the domestic market, the Hang Ten (BVI) Group will continually pursue the existing strategies of the Hang Ten (BVI) Group and expansion plans that focus primarily on merchandising, marketing and distribution. However, Akai Shareholders should note that the future prospects of the Hang Ten Group are (i) extremely sensitive to factors including but not limited to the economic environment in the markets in which the Hang Ten Group operates, the overall demand for apparel and accessories and the future plan of the Hang Ten Group; and (ii) may be affected by unforeseen events. Ð 100 Ð LETTER FROM HORWATH CAPITAL ASIA LIMITED

Details of the business of the Hang Ten Group are set out in the letter from the board of directors of Hang Ten contained in the Document. Your attention is also drawn to the section headed “Risk Factors” in the Document which sets out certain risk factors associated with the business of the Hang Ten Group. The Akai Shareholders are strongly recommended to read that letter and section in detail.

Further financial information of the Hang Ten Group are set out in Appendices II and III to the Document.

In the absence of a formal and comprehensive future plan of the Hang Ten Group, we are unable to comment on the future prospect of the Hang Ten Group. However, in view of all of the above, we consider that the Hang Ten Group has a viable business for the purpose of rescuing Akai and will have sufficient operating assets to continue its business operations.

2. RECOMMENDATION

As stated in the letter from the Liquidators contained in the Document, the Stock Exchange will not consider an alternative resumption proposal. This means that the Proposal is the only option currently available to the Akai Shareholders. In view of the financial position of Akai as summarised in the Statement of Affairs, it is inconceivable that there will be any surplus value left in Akai for the Akai Shareholders in the event that Akai is wound up. Akai Shareholders who are uncertain of their individual positions are recommended to consult their personal financial advisers. Having regard to the above principal factors and reasons, we consider that the terms of the Proposal are fair and reasonable so far as the Akai Shareholders are concerned and that the Proposal is in the interests of the Akai Shareholders. Accordingly, we recommend the Akai Shareholders to vote in favour of the resolutions to be proposed at the Scheme Meeting and the Special General Meeting to approve the Scheme and the Proposal respectively.

Yours faithfully, For and on behalf of Horwath Capital Asia Limited Francis K Tung Managing Director

Ð 101 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

1. INTRODUCTION

This Explanatory Statement sets out the background to and the effect of transactions contemplated by the Proposal, including the Scheme, and explains why you should consider voting in favour of the Scheme at the Scheme Meeting and the Special General Meeting.

2. BACKGROUND TO AND REASONS FOR THE PROPOSAL

Akai was originally incorporated in Hong Kong on 23 November 1982 as Aramast (Hong Kong) Limited. Aramast (Hong Kong) Limited changed its name to Semi-Tech Microelectronics (Far East) Limited in 1983 and was listed on the Stock Exchange on 30 October 1987. Semi-Tech Microelectronics (Far East) Limited changed its name to Semi-Tech (Global) Limited in 1990. A redomicile exercise took place in 1992 pursuant to which a new company, Semi-Tech (Global) Company Limited, was incorporated in Bermuda and became the successor company to the existing Hong Kong company, Semi-Tech (Global) Limited. Semi-Tech (Global) Limited, the existing Hong Kong company, is now a subsidiary of Semi- Tech (Global) Company Limited, the Bermuda company. The principal business of Akai, prior to the Courts ordering its winding-up, was as an investment vehicle for the Semi-Tech Corporation Limited and its subsidiaries.

Appointment of Liquidators

On 13 January 2000, the Petitioning Creditors filed a winding-up petition in Hong Kong. On 23 August 2000, the Hong Kong Court ordered that Akai be wound-up and appointed the Official Receiver as provisional liquidator pursuant to section 194(1)(a) of the Companies Ordinance pending a first meeting of creditors. On 24 May 2001, the Liquidators were appointed as the joint and several liquidators of Akai by the Hong Kong Court.

On 28 August 2000, the Petitioning Creditors filed a winding-up petition in Bermuda. On that same day, the Bermuda Court appointed R. Craig Christensen provisional liquidator and, on 1 September 2000, the Bermudian Court appointed Fan Wai Kuen, Joseph and Damien Hodgkinson, together with R. Craig Christensen, as joint and several provisional liquidators of Akai pursuant to section 170(2) of the Companies Act pending a first meeting of creditors. On 29 September 2000, the Bermuda Court ordered that Akai be wound up. On 16 March 2001, the Liquidators were appointed as the joint and several liquidators of Akai by the Bermuda Court.

Role of Liquidator

In summary, the role of a liquidator is to collect and realise the assets of a company. The proceeds from the realisation of a company’s assets are applied in discharging all of the company’s debts and liabilities after paying the costs and expenses of the winding-up. Any balance that remains is distributed among the company’s shareholders according to their rights and interests or otherwise dealt with as the company’s memorandum of association and bye-laws direct.

Ð 102 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

Estimated return to Akai and likely prospects of return to Akai Shareholders

At present, there are few tangible assets under the control of the Liquidators. A number of legal claims against various parties have been identified by the Liquidators. As at the Latest Practicable Date it is not known whether these claims are worth pursuing as there are insufficient funds available to the Liquidators to undertake the necessary investigations or to obtain legal advice.

Given the lack of funds and limited information available to the Liquidators, as at the Latest Practicable Date the Liquidators were unable to estimate with any degree of certainty what, if any, realisations may be available from the winding-up of Akai. However, if the Proposal is successfully implemented, there will be gross realisations of HK$12,000,000 in cash and the proceeds of sale of the Creditors’ Share Allocation which will be the first material realisations in the winding-up of Akai.

De-listing Procedure

The Stock Exchange placed Akai in the de-listing procedure set out in Practice Note 17 to the Listing Rules with effect from 23 August 2000 which was the date the Hong Kong Court ordered Akai to be wound up.

On 7 September 2001, the Stock Exchange advised Akai that it was in the third stage of the de-listing procedure and that, unless a resumption proposal was submitted to the Stock Exchange by no later than 11 March 2002, the listing of the Akai Shares on the Stock Exchange would be cancelled.

On 28 February 2002, Akai submitted the Proposal to the Stock Exchange. On 8 March 2002, the Stock Exchange advised Akai that the Listing Committee had approved the extension of the cancellation of the listing of the Akai Shares up to 17 July 2002 to enable the Proposal to be progressed.

On 12 July 2002, the Stock Exchange advised Akai that the Listing Committee had approved the extension of the cancellation of the listing of the Akai Shares up to 29 November 2002 to enable Akai to proceed with the Proposal and the new listing application of Hang Ten under the Proposal.

Ð 103 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

The Restructuring Agreement

As the Latest Practicable Date, the principal realisable asset of Akai is the listed status of the Akai Shares. Value can only be realised from this asset as long as the Akai Shares are not de-listed. The de-listing procedure for a company listed on the Stock Exchange takes place in accordance with a strict timetable. If a viable resumption proposal is not submitted to the Stock Exchange within 18 months of suspension of trading, the company will automatically be de-listed. Further, once the 18 month deadline has been reached, the Stock Exchange will only consider the resumption proposal which has been submitted and no other.

On the Liquidators’ appointment, they concluded that it was likely to be in the best interests of Creditors and Akai Shareholders if a resumption proposal could be submitted to the Stock Exchange.

The Liquidators spoke to a number of parties who expressed an interest in facilitating a resumption proposal. A number of potential investors approached the Liquidators with resumption proposals between September 2001 and February 2002. The Liquidators formed the view that the Proposal submitted by the Investors was the resumption proposal which was most likely to be successfully implemented and provide the highest potential return to Creditors. Accordingly, on 16 April 2002, Akai, the Liquidators and the Investors, among others, executed the Restructuring Agreement which sets out the economic terms of the Proposal and a framework for the various steps required to implement the Proposal.

Requirement for Creditors’ Schemes

The Hong Kong Court has previously ruled that, in so far as shareholders of a listed company in liquidation are not expected to receive any return in the liquidation, any consideration made available to the shareholders for the exchange of their shares would be a concession on the part of the creditors. The Hong Kong Court has held that this is a modification of the legal rights of creditors as there is an alteration of the statutory order for the application of the assets of the company in an insolvent winding-up proceeding. It is therefore necessary for the Creditors to approve the receipt of Hang Ten Shares by the Akai Shareholders under the Scheme. The successful implementation of the Proposal is conditional upon obtaining the approval of the Creditors of the Creditors’ Schemes and the subsequent sanction by the Courts of the Creditors’ Schemes.

The Creditors’ Schemes have been approved unanimously by the Creditors voting and present at the Creditors’ Scheme Meetings held on 26 September 2002 and on 25 October 2002, the Bermuda Court made an order sanctioning the Creditors’ Scheme proposed under Section 99 of the Companies Act.

Ð 104 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

3. THE PROPOSAL

The Proposal involves:

(a) Hang Ten acquiring the entire issued share capital of Hang Ten (BVI) from the Investors and the Other Investors in consideration of the Investors’ Securities Allocation and the Other Investors’ Securities Allocation respectively, as a result of which the Investors will hold a controlling interest in Hang Ten;

(b) under the Scheme, Akai Shareholders on the Final Record Date transferring all of their Akai Shares to Hang Ten in consideration of which Akai Shareholders will receive in aggregate 300,000,000 Hang Ten Shares, credited as fully paid up, to be distributed among the Akai Shareholders pro rata in accordance with their respective holdings of Akai Shares (subject to rounding down) held on the Final Record Date;

(i) paying to Akai a cash consideration of HK$12,000,000; and

(ii) issuing the Creditors’ Share Allocation to Akai being 2,100,000,000 Hang Ten Shares, credited as fully paid up and ranking pari passu with all other Hang Ten Shares in issue on the Closing Date;

(d) listing of the Akai Shares being withdrawn from the Stock Exchange and the Hang Ten Shares being listed on the Stock Exchange by way of Introduction; and

(e) on the Closing Date, Hang Ten transferring all of the Akai Shares to the Liquidators (or their nominees) for the sum of HK$1.00.

(f) If there is any surplus available for Akai Shareholders after the discharge of the costs and expenses of the winding-up of Akai and the payment in full of the Creditors, such surplus will be held on trust by the Scheme Trustee for the Akai Shareholders.

Scheme

Under the terms of the Scheme:

(a) Akai Shareholders on the Final Record Date will transfer all of their Akai Shares to Hang Ten free from all Security Interests and other adverse rights and interests together with all rights attaching to the Akai Shares as at the Effective Date and in exchange, Akai Shareholders whose names appear on Akai’s register of members on the Final Record Date will receive in aggregate 300,000,000 Hang Ten Shares, credited as fully paid, to be distributed among the Akai Shareholders pro rata in accordance with their respective holdings of Akai Shares (subject to rounding down) held on the Final Record Date.

On the basis of 2,191,302,089 Akai Shares in issue as at 30 November 2000, each Akai Shareholder, for every 500 Akai Shares held by that Akai Shareholder at the Final Record Date, will receive approximately 68 Hang Ten Shares.

Fractional entitlements to Hang Ten Shares will be aggregated and transferred to Akai. The Hang Ten Shares issued to the Akai Shareholders on the Closing Date will rank pari passu in all respects with all other Hang Ten Shares in issue on the Closing Date.

(b) As from the Effective Date, all certificates representing Akai Shares will cease to have effect for any purpose and every Akai Shareholder shall be bound on the request of the Liquidators or Hang Ten, to deliver up the certificates for their Akai Shares to the Liquidators or Hang Ten.

(c) If Akai’s winding-up becomes a solvent winding-up then the Scheme Trustee will hold on trust for Akai Shareholders any surplus from the realisation of Akai’s assets after paying the costs and expenses of the winding-up and the discharging in full the Claims of Creditors.

Conditions Precedent to the Proposal

The Proposal involves a number of separate transactions which are each subject to their own conditions. Satisfaction of some of these conditions will be outside the control of the Liquidators, Akai, Hang Ten and the Investors. Accordingly, there may be circumstances which may either delay the implementation of the Proposal or cause the Proposal to fail altogether.

Closing is conditional on each of the following conditions being satisfied (to the extent not waived or amended) prior to the Long Stop Date. The sanction of the Courts will not be sought for the Schemes unless the following conditions have been satisfied, or, in the opinion of the Liquidators, are likely to be satisfied or amended or waived, by the Effective Date. The Liquidators and the Investors will not waive any of the conditions (including the condition listed in (d) below) the fulfilment of which is required by the Code, the Listing Rules or other applicable laws in order for the Scheme to be successfully implemented.

(a) The passing of all necessary resolutions by the Akai Shareholders (other than (a) the Investors or any persons acting in concert with them who are not permitted to vote pursuant to the Code and (b) the directors, chief executive and any controlling shareholder of Akai or their

Ð 106 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

respective associates pursuant to Rule 6.12 of the Listing Rules) approving the implementation of the Proposal to be proposed at the Special General Meeting.

(b) The approval of the Creditors’ Schemes by a majority in number representing not less than three-fourths in value of Creditors present and voting in person or by proxy at the Creditors’ Scheme Meetings, the sanction by the Courts of the Creditors’ Schemes and delivery of office copies of the orders of the Hong Kong Court and the Bermuda Court to the Registrar of Companies in Hong Kong and the Registrar of Companies in Bermuda respectively for registration.

(d) In addition, Rule 2.10 of the Code provides that the Scheme may only be implemented if:

(i) the Scheme is approved by at least 75% of the votes attaching to the disinterested Akai Shares that are cast either in person or by proxy at the Special General Meeting by way of a poll; and

(ii) the number of votes cast against the resolution to approve the Scheme at the Special General Meeting is not more than 10% of the votes attaching to all disinterested Akai Shares.

(e) Approval by the Listing Committee of the Stock Exchange of the withdrawal of the listing of the Akai Shares.

(g) Appropriate approval from the SFC relating to the Proposal.

(h) Approval by all relevant authorities for the issue of the Hang Ten Shares pursuant to the Proposal.

(j) Duly executed Warrant Instrument.

(k) The Sale and Purchase Agreement being duly executed, the completion of which is conditional only on the issue of the Closing Notice.

Ð 107 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

The conditions listed at (a) to (k) above must be satisfied (to the extent not waived or amended) prior to Closing in order for the Proposal to be successfully implemented. The Creditors’ Schemes have been approved by the requisite majority in number and value of the Creditors at the Creditors’ Scheme Meetings held on 26 September 2002 and on 25 October 2002 the Bermuda Court made an order sanctioning the Creditors’ Scheme proposed under section 99 of the Companies Act. On 28 October 2002, the Sale and Purchase Agreement has been executed by the parties thereto. Except as mentioned, as at the Latest Practicable Date, the conditions set out above are outstanding.

Assuming that each of the conditions are satisfied or waived, it is anticipated that the Effective Date for the Scheme and the Creditors’ Schemes will be on or before 4 December 2002 and the Closing Date for the implementation of the Proposal on 5 December 2002. If any of the conditions referred to in (a) to (k) above have not been fulfilled by 31 December 2002, the Proposal will lapse unless a later date is agreed among the parties to the Restructuring Agreement. Akai Shareholders will be notified by an announcement placed in one English language newspaper and one Chinese language newspaper circulating in Hong Kong and one newspaper in Bermuda of the Closing Date or that the Proposal has lapsed.

Effectiveness of the Scheme

The Scheme will become binding and effective on Akai and the Akai Shareholders under Bermuda law if the following conditions are satisfied:

(a) a majority in number of Akai Shareholders, representing at least three fourths in value of Akai Shareholders present and voting in person or by proxy at the Scheme Meeting, vote in favour of the Scheme;

(b) the majorities required under Rule 2.10 of the Code are satisfied; and

(c) the Bermuda Court sanctions the Scheme and an office copy of the order of the Bermuda Court sanctioning the Scheme is delivered to the Registrar of Companies in Bermuda for registration.

Summary

The successful implementation of the Proposal will allow Akai Shareholders to receive a return for their co-operation in realising the value of the listed status of Akai, notwithstanding the winding-up of Akai through the Scheme. Even if the Proposal is implemented, it is highly unlikely that Creditors will receive a complete discharge of their Claims. Accordingly, regardless of whether or not the Scheme is implemented, it is highly unlikely that Akai Shareholders will receive a dividend in Akai’s winding-up.

In the highly unlikely event that Akai’s winding-up becomes a solvent winding-up then the Scheme Trustee will hold on trust for Akai Shareholders any surplus from the realisation of Akai’s assets after paying the costs and expenses of the winding-up and discharging in full the Claims.

The implementation of the Proposal is dependent on a majority in number of Akai Shareholders representing at least three-fourths in value voting in favour of the Scheme at the Scheme Meeting. If the Proposal is not successfully implemented you will not receive any value for your Akai Shares under the Scheme. As such, the Proposal represents your only realistic chance of receiving some value from your status as an Akai Shareholder.

Ð 108 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

4. EFFECTS OF THE PROPOSAL ON THE HANG TEN GROUP (a) Shareholding Structure

Set out below is the shareholding structure of Akai at the Latest Practicable Date, the shareholding structure of Hang Ten upon Closing and conversion of 269 CPS issued to the Other Investors into 2,690,000,000 Hang Ten Shares on the Closing Date and after the issue and allotment of further Hang Ten Shares upon full exercise of the Warrants (assuming an exercise price of HK$0.01 per Hang Ten Share) and full conversion of the CPS held by the Investors (assuming a conversion price of HK$0.001 per Hang Ten Share). Upon Closing Upon Closing Upon Closing with no CPS issued to with all CPS with all CPS the Investors issued to the Investors issued to the Investors converted converted but before converted and Before Closing or Warrants exercised exercise of the Warrants all Warrants exercised Number of Number of Number of Number of Akai Shares Hang Ten Shares Hang Ten Shares Hang Ten Shares (million shares) % (million shares) % (million shares) % (million shares) % THE INVESTORS The Kung Family (Notes 1 &3) Asian Wide Ð Ð 12,600 46.49% 56,940 58.41% 59,460.00 58.36% Kenneth Hung Ð Ð 800 2.94% 3,620 3.71% 3,780.00 3.71% Dennis Kung Ð Ð 400 1.48% 1,810 1.86% 1,890.00 1.86% Peggy Hung Ð Ð 400 1.48% 1,810 1.86% 1,890.00 1.86% Pamela Hung Ð Ð 400 1.48% 1,810 1.86% 1,890.00 1.86% YGM (Note 3) Ð Ð 5,000 18.45% 22,590 23.18% 23,590.00 23.15% Ms. Kao (director of Hang Ten) (Note 3) Ð Ð 200 0.74% 900 0.92% 940.00 0.92% Ms. Wang (director of Hang Ten) (Note 3) Ð Ð 200 0.74% 900 0.92% 940.00 0.92%

Sub-total Ð Ð 20,000 73.80% 90,380 92.72% 94,380.00 92.64% OTHER INVESTORS (Notes 2 & 3) Best Standand Ð Ð 1,993 7.36% 1,993 2.05% 2,085.60 2.06% Raytop Ð Ð 1,507 5.56% 1,507 1.54% 1,576.40 1.54% DESIGNATED PERSON (Note 3) Ð Ð 1,200 4.43% 1,200 1.23% 1,440.00 1.41% AKAI SHAREHOLDERS 2,191 100.00% 300 1.10% 300 0.31% 300.00 0.29% LIQUIDATORS (for the benefit of the Creditors) Ð Ð 2,100 7.75% 2,100 2.15% 2,100.00 2.06%

Sub-total 2,191 100.00% 7,100 26.20% 7,100 7.28% 7,502.00 7.36%

Total 2,191 100.00% 27,100 100.00% 97,480 100.00% 101,882.00 100.00%

Ð 109 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

Sub-total Ð Ð 24,700 91.15% 95,080 97.54% 99,482 97.65%

Akai Shareholders 2,191 100.00% 300 1.10% 300 0.31% 300 0.29%

Liquidators (for the benefit of the Creditors) Ð Ð 2,100 7.75% 2,100 2.15% 2,100 2.06%

Total 2,191 100.00% 27,100 100.00% 97,480 100.00% 101,882 100.00%

On the Closing Date the Investors will control approximately 73.80% of the issued ordinary share capital of Hang Ten. The Hang Ten Shares to be held by the public will consist of Hang Ten Shares issued to the Designated Person, the Other Investors, the Liquidators (for the benefit of Creditors) and the Akai Shareholders representing approximately 26.20% of its issued ordinary share capital immediately upon Closing but excluding any Hang Ten Shares which may be issued on conversion of those CPS issued to the Investors or the exercise of the Warrants. It will be a term of the Warrants and the CPS that no holder thereof will be entitled to exercise the subscription and conversion rights attaching to the Warrants and the CPS respectively if such exercise would result in the public float of the Hang Ten Shares falling below the minimum prescribed percentage as required under the Listing Rules.

Ð 110 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

The Stock Exchange has stated that it will closely monitor trading in the Hang Ten Shares if less than 25 per cent. of the Hang Ten Shares are held by the public.

The Stock Exchange will also closely monitor all future acquisitions or disposals of assets by Hang Ten. The Stock Exchange has the discretion to require Hang Ten to issue an announcement and/or a circular to its shareholders irrespective of the size of the proposed transaction, particularly when a proposed transaction represents a departure from the principal activities of the Hang Ten Group. The Stock Exchange also has the power to aggregate a series of transactions and any such transaction may result in Hang Ten being treated as if it were a new listing applicant. If the Stock Exchange believes that:

1. a false market exists or may exist in the Hang Ten Shares; or

2. there are too few Hang Ten Shares in public hands to maintain an orderly market;

then it will consider exercising its discretion to suspend dealings in the Hang Ten Shares.

(b) Indebtedness of the Hang Ten Group

Borrowings

At the close of business on 31 August 2002, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this document, the Hang Ten Group had outstanding borrowings totalling approximately US$40 million. These borrowings comprise unsecured bank overdrafts of US$0.4 million, secured bank loans of approximately US$18.9 million, unsecured bank loans of approximately US$3.8 million, unsecured loans advanced by the Investors of US$16.4 million and unsecured loans advanced by a minority shareholder of a subsidiary of US$0.5 million.

Guarantees and securities

As at 31 August 2002, the Hang Ten Group had banking facilities in respect of loans, overdrafts and import/export facilities totalling approximately US$41.1 million, of which US$18.9 million were secured by pledge of 620,681 shares of ILC, representing 97.01% of the issued share capital of ILC, and US$10.5 million were secured by unconditional personal guarantees executed by shareholders of Hang Ten (BVI), Mr. Dennis Kung and Ms. Wang Li Wen. On 23 August and 26 September 2002, Hang Ten (BVI) obtained an approval-in- principle letter from two banks in respect of banking facilities totalling approximately US$6.15 million for replacing the personal guarantees given by Mr. Dennis Kung and Ms. Wang Li Wen with corporate guarantees to be given by member(s) of the Hang Ten Group upon listing. On 16 September 2002, Hang Ten Group terminated banking facilities totalling approximately of US$4.35 million granted by another two banks which were supported by the personal guarantees of Mr. Kung and Ms. Wang and the Directors confirm that the said banking facilities have never been used and there will not be any adverse effect on the Hang Ten Group after such termination. Accordingly, the banking facilities of the Hang Ten Group will not be secured by any unconditional personal guarantees executed by Mr. Dennis Kung and Ms. Wang upon listing of the Hang Ten Shares which will be replaced by corporate guarantees from member(s) of the Hang Ten Group.

Ð 111 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

As at 31 August 2002, the Hang Ten Group did not have any mortgages or charges.

Contingent liabilities

As at 31 August 2002, the Hang Ten Group had the following material contingent liabilities:

US$ Outstanding letters of credit for the purchase of goods 4,728,000 Tax contingency 1,040,000

5,768,000

Disclaimer

Save as aforesaid, at the close of business on 31 August 2002, none of Hang Ten nor any member of the Hang Ten (BVI) Group had any outstanding mortgages, charges, debentures or other loan capital or bank overdrafts or loans or other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptance or acceptance credits, guarantees or other material contingent liabilities.

The Directors have confirmed, that, save as disclosed on this page, there has been no material change in the indebtedness and contingent liabilities of the Hang Ten Group since 31 August 2002.

Save as disclosed on page 163 of this document, none of Hang Ten and the companies comprising the Hang Ten (BVI) Group had on the Latest Practicable Date any mortgages, charges, debentures, loan capital, bank overdrafts, loans debt securities or other similar indebtedness, hire purchase commitments, liabilities under acceptances (other than normal trade bills) or acceptance credits or any guarantees or other material contingent liabilities.

Save as disclosed in Appendix V of this document, the Liquidators are not aware of any material change in the indebtedness and contingent liabilities of Akai since the last audited accounts of Akai.

Ð 112 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

5. INTERESTS OF DIRECTORS

The powers of Akai’s directors ceased on the commencement of Akai’s winding-up. Pursuant to section 166A(1)(a) of the Companies Ordinance and section 100(1)(a) of the Companies Act, the Liquidators have asked each Person who was director of Akai on the commencement of its liquidation whether he has any material interest in the Scheme or the Creditors’ Schemes, whether as a director of Akai or an Akai Shareholder or a Creditor, and the effect thereon of the arrangement in so far as it is different from the effect on the like interests of other Persons.

The Liquidators have received responses from two of the directors of Akai, Mr. Tadayubi Ito and Mr. Michael Kan, who have both advised that they have no material interest in the Schemes that is different from the effect on the like interests of other Persons.

The remaining directors of Akai have not responded to the Liquidators. However, the Liquidators are not aware of any material interest that the remaining directors of Akai have or of any effect which would be different from the effect on the like interests of other Persons.

6. PROCEDURE AND MISCELLANEOUS MATTERS

Record Date

The Voting Record Date is 23 November 2002. Persons who are Akai Shareholders on the Voting Record Date are entitled to vote at the Scheme Meeting.

Akai Shareholders at the Final Record Date will qualify for the benefits of the Scheme. Akai Shareholders should be aware that pursuant to section 166 of the Companies Act and section 182 of the Companies Ordinance any transfer of shares or the alteration in the status of the shareholders of a company made after the commencement of a company’s winding-up, shall, unless the Courts order otherwise, be void. Accordingly, any Person wishing to effect a transfer of their Akai Shares can only do so with the sanction of the Courts. Following the sanction of the Courts to the transfer of such Akai Shares, the Person concerned should ensure that the appropriate forms of transfer accompanied by the relevant certificates or other evidence of title are submitted to the Liquidators.

Registered address outside Hong Kong

If the registered address of an Akai Shareholder is outside Hong Kong and, in the opinion of the Directors and the Liquidators, the allotment and issue of Hang Ten Shares may be prohibited by any relevant law or so prohibited except after compliance with conditions or requirements which the Directors and the Liquidators regard as unduly onerous, impracticable or uneconomic, subject to the Executive’s approval, Hang Ten may allot and issue such Hang Ten Shares to the Liquidators or a Person selected by the Liquidators (the “Authorised Allottee”) who shall sell the same for such price on market after the commencement of the trading of the Hang Ten Shares on the Stock Exchange as they may obtain and pay the net cash proceeds to that Akai Shareholder in full satisfaction of his rights under the Scheme immediately after the trade settlement date, except that

Ð 113 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA) no payment will be made of an amount of less than HK$50. Any such amount will be retained by the Liquidators for the benefit of Akai’s winding-up.

The Liquidators and Hang Ten have formed the view, on the advice of Malaysian counsel, that the issue and allotment of Hang Ten Shares to Akai Shareholders whose registered addresses are in Malaysia would be prohibited except after compliance with unduly onerous, impracticable or uneconomic requirements or conditions. Accordingly, Akai Shareholders whose registered addresses are in Malaysia on the Final Record Date will not be entitled to be issued or allotted Hang Ten Shares but will be entitled to receive net cash proceeds in accordance with the paragraph above.

For Akai Shareholders with registered addresses in Malaysia, it should be noted that the Authorised Allottee neither holds the Hang Ten Shares nor the net cash proceeds (i) on any trust (whether actual, constructive, implied, resulting or otherwise) or (ii) for and on behalf of, the Akai Shareholders with registered addresses in Malaysia.

Akai Shareholders should note that the Hang Ten Shares and any documents in relation thereto to be issued under the Scheme will not be registered or filed in any jurisdiction. Akai Shareholders should inform themselves about any laws and regulations in overseas jurisdictions applicable to them or their shareholdings and ensure that such laws and regulations are complied with and that they obtain any permissions or consents required to be obtained by them. Akai Shareholders are strongly recommended to consult their professional advisers as to any overseas securities law implications of the Scheme which may be applicable to them or their shareholdings. None of Hang Ten, Akai, the Liquidators or their respective directors or any other parties involved in the Proposal accept any responsibility for any consequential liabilities in respect of overseas securities laws incurred on the part of Akai Shareholders arising from the implementation of the Scheme.

Termination of the Scheme

The Scheme will terminate on the earlier of the date of dissolution of Akai or the date on which payments from the Scheme Fund to Akai Shareholders have been completed.

Ð 114 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

Costs of the Proposal and of the Scheme

The Investors have agreed that Hang Ten will pay the fees, costs and expenses incurred by Akai in respect of implementing the Proposal (including the Scheme) and any stamp duty in respect of the Akai Shareholders receiving Hang Ten Shares up to a maximum amount of HK$6,450,000.

Action to be Taken

The following meetings of Akai Shareholders have been convened in connection with the implementation of the Proposal.

(a) The Scheme Meeting

(b) Special General Meeting

The Special General Meeting has been convened for the purpose of considering and, if thought fit, passing the resolutions approving the implementation of the Proposal, and the Scheme for the purpose of Rule 6.12 of the Listing Rules.

The formal notice of the Special General Meeting is set out on page 368 of this document.

Enclosed with this document are:

(i) a yellow form of proxy for use at the Scheme Meeting; and

(ii) a blue form of proxy for use at the Special General Meeting.

Whether or not you intend to attend the relevant meetings in person, please complete and return the forms of proxy as soon as possible and, in any event, not less than 48 hours before the time appointed for the relevant meetings. Completed forms of proxy should be returned to the principal place of business of Akai at 7th Floor, Allied Kajima Building, 138 Gloucester Road, Wanchai, Hong Kong. Proxy forms for the relevant meeting may be handed to the Chairman of the meeting.

7. WITHDRAWAL OF LISTING OF AKAI SHARES FROM THE STOCK EXCHANGE

Listing of Akai Shares on the Stock Exchange will be withdrawn at close of business on the Business Day following the Closing Date.

Existing Certificates

Under the Scheme, every certificate for Akai Shares validly subsisting at the Final Record Date will, on the Effective Date, cease to be valid for any purpose and every holder of such certificate will be bound at the request of Hang Ten or the Liquidators to deliver up the same to Akai for cancellation.

Existing Mandates

Under the Scheme, all mandates and other instructions in force at the opening of business on the Effective Date in relation to the payment of dividends on or other matters relating to the Akai Shares in issue at the Final Record Date shall, unless and until revoked, be deemed as from the Effective Date to be valid and subsisting mandates and instructions to Hang Ten in relation to the payment of dividends on or the corresponding matters relating to Hang Ten Shares to be allotted and issued under the Scheme. Akai will be obliged to deliver such mandates and instructions to Hang Ten.

8. LISTING OF HANG TEN SHARES ON THE STOCK EXCHANGE

An application has been made on behalf of Hang Ten to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Hang Ten Shares in issue and to be issued under the Restructuring Documents and any Hang Ten Shares which may fall to be issued on conversion of the CPS and exercise of the Warrants and Options.

No share or loan capital of Hang Ten is listed or dealt in on any other stock exchange. Hang Ten is not seeking or proposing to seek a listing of or permission to deal in the Hang Ten Shares on any other stock exchange.

Upon Closing but prior to the conversion of any CPS issued to the Investors or exercise of any Warrants, the Investors will hold approximately 73.80 per cent. of the issued ordinary share capital of Hang Ten and the remaining 26.20 per cent. of its issued ordinary share capital will be held by the public. It will be a term of the Warrants and the CPS that no holder thereof will be entitled to exercise the subscription and conversion rights attaching to the Warrants and the CPS respectively if such exercise would result in the public float of the Hang Ten Shares falling below the minimum prescribed percentage as required under the Listing Rules. Accordingly, there will be sufficient public float for the Hang Ten Shares following Closing in compliance with Rule 8 of the Listing Rules.

The Stock Exchange requires that, in the event that less than twenty five (25) per cent. of the issued share capital of Hang Ten is in public hands following the Closing, it will closely monitor trading in the Hang Ten Shares. If the Stock Exchange believes that a false market exists or may exist, it may exercise its discretion to suspend dealings in the Hang Ten Shares. Ð 116 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

The Stock Exchange requires that, following the listing of the Hang Ten Shares, any acquisitions or disposals of assets by Hang Ten will be subject to the provisions of the Listing Rules. Under the Listing Rules, the Stock Exchange has a discretion to require Hang Ten to issue an announcement and/or a circular to its shareholders when any acquisition or disposal by Hang Ten is proposed, irrespective of the size of such acquisition or disposal and, in particular, when such acquisition or disposal represents a departure from the principal activities of the Hang Ten Group following the implementation of the Proposal. The Stock Exchange also has the power, pursuant to the Listing Rules, to aggregate a series of acquisitions or disposals by Hang Ten and any such acquisitions or disposals may in any event result in Hang Ten being treated as a new applicant for listing.

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

Board lots and certificates for Hang Ten Shares

On the Effective Date, certificates representing the Akai Shares will cease to have effect and the listing of the Akai Shares on the Stock Exchange will be withdrawn. Certificates representing the appropriate number of Hang Ten Shares, in registered form, will be despatched to the Akai Shareholders at the Final Record Date on the Closing Date. Persons entitled to Akai Shares who are not registered holders thereof should make an application to the applicable Courts as soon as possible to effect a transfer of the Akai Shares and should ensure that the appropriate form of transfer accompanied by the relevant certificates or other evidence of title are submitted to the share registrar of Akai following the Courts’ sanction to such transfer as referred to in the section headed “Record Date” above.

On the assumption that the Scheme becomes effective on 4 December 2002, it is expected that certificates for the Hang Ten Shares will be posted to Akai Shareholders at their own risk on 5 December 2002. Certificates for the Hang Ten Shares will be posted to Akai Shareholders at their registered addresses (or, in the case of joint holders, at the address of that joint holder whose name stands first in the register of members of Akai in respect of the joint holding) on the Final Record Date.

The proposed board lot for trading in the Hang Ten Shares on the Stock Exchange is 100,000.

Ð 117 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

Arrangements for odd lot trading

In order to alleviate difficulties in trading in odd lots of Hang Ten Shares arising from the share exchange under the Scheme, Hang Ten has appointed Kim Eng Securities (Hong Kong) Limited to match the sale and purchase of odd lots of Hang Ten Shares during the period from the first day of dealing of the Hang Ten Shares on the Stock Exchange, which is currently expected to be 9 December 2002, to 8 January 2003 (both days inclusive). Holders of the Hang Ten Shares in odd lots who wish to take advantage of this facility either to dispose of their odd lots or to top up their odd lots to a board lot of 100,000 Hang Ten Shares may through their brokers contact Kim Eng Securities (Hong Kong) Limited. During this period holders of Hang Ten Shares in odd lots should note that the matching of the sale and purchase of odd lots of the Hang Ten Shares is not guaranteed.

Akai Shareholders are advised to consult their professional advisers if they are in any doubt as to the facility described above.

9. TAXATION AND STAMP DUTY

Akai Shareholders having a registered address or being resident outside of Hong Kong may be subject to overseas taxation or deemed profits or capital gains arising from the exchange of the Akai Shares for the Hang Ten Shares. Akai Shareholders, whether in Hong Kong or in other jurisdictions, are recommended to consult their own professional advisers if they are in any doubt as to the tax implications of the Scheme and, in particular, whether the receipt of the Hang Ten Shares for their Akai Shares would render such holders liable to taxation in Hong Kong or in other jurisdictions. It is emphasised that the taxation implications of the Scheme are personal matters of Akai Shareholders themselves and none of Hang Ten, its Directors and officers, the Liquidators or any of the other parties involved in the Proposal accept any responsibility for any taxation effect on or the liabilities of the Akai Shareholders.

Any stamp duty in respect of the Akai Shareholders receiving Hang Ten Shares will be payable by Hang Ten as part of the costs as described in the section headed “Costs of the Proposal and of the Scheme” in this Explanatory Statement.

10. CHAIRMAN OF THE SCHEME MEETING

At the direction of the Bermuda Court, Cosimo Borrelli of RSM Corporate, or, failing him Nicholas Timothy Cornforth Hill being one of the Liquidators, or failing both of them Fan Wai Kuen, Joseph, also being one of the Liquidators, has been appointed to act as Chairman of the Scheme Meeting.

11. CAPACITY OF THE LIQUIDATORS

The involvement of the Liquidators in the Scheme is solely for the purpose of receiving and enforcing the obligations and undertakings made by Akai pursuant to, inter alia, the Scheme and the Restructuring Documents. None of the Liquidators and their advisers nor any of their representatives, partners, staff or agents shall incur any personal liability under the terms of the Scheme, the Restructuring Documents or otherwise.

Ð 118 Ð EXPLANATORY STATEMENT (IN COMPLIANCE WITH SECTION 100 OF THE COMPANIES ACT 1981 OF BERMUDA)

12. ADDITIONAL INFORMATION

Your attention is drawn to the appendices to this document.

13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of Preston Gates Ellis at 10th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong during normal business hours on Business Days from the date of this document up to and including the day before the first day of dealings in the Hang Ten Shares on the Stock Exchange or, if earlier, the day when Akai declares that the Proposal has lapsed:

(a) the Memorandum of Association and Bye-laws of Hang Ten and Akai;

(b) the Accountants’ Report on Hang Ten set out in Appendix II and the related statement of adjustments;

(c) the audited financial statements as have been prepared for each of the companies comprising the Hang Ten Group for each of the three years ended 31 March 2002;

(d) the audited financial statements of Akai for the year ended 31 January 1999;

(e) the letter of advice from Horwath;

(f) the material contracts referred to in Appendix VII including the Restructuring Agreement;

(g) the written consents referred to in Appendix VII;

(h) the rules of the Share Option Scheme;

(i) the letter, summary of values and valuation certificate prepared by Chesterton Petty Limited in connection with the valuation of Hang Ten Group’s property interests;

(j) the letter of advice from Conyers Dill & Pearman as referred to in Appendix VI;

(k) the undertakings from members of the Kung Family and its shareholders as referred to in the section headed “Undertakings” in the letter from the board of directors of Hang Ten Group Holdings Limited; and

(l) the service contracts as referred to under the paragraph headed “Particulars of service contracts” in Appendix VII.

Ð 119 Ð APPENDIX I SUMMARY OF THE TERMS OF THE WARRANTS AND CPS

PRINCIPAL TERMS OF THE WARRANTS

The Warrants will be issued in registered form and constituted under the Warrant Instrument to be executed by Hang Ten by way of deed poll on completion of the Sale and Purchase Agreement. The Warrants will be issued, subject to and having the benefit of, at least the following principal terms and conditions:

(a) subject to paragraph (b) below, the Warrants will entitle its holders to subscribe in aggregate up to HK$44,020,000 for Hang Ten Shares at an initial subscription price of HK$0.01 each (subject to adjustments to take account of, among other things, alterations to the share capital of Hang Ten);

(b) a holder of the Warrants may not exercise the subscription rights attached to his Warrants if such exercise would result in the number of Hang Ten Shares which are in the hands of the public falling below 25% or the relevant prescribed minimum percentage for Hang Ten as required by the Stock Exchange from time to time;

(c) subject as described in paragraph (b) above, the Warrants are exercisable in whole or in part at any time during the three year period following the date of issue of the Warrants;

(d) all Hang Ten Shares that are issued on an exercise of the Warrants will rank pari passu with the Hang Ten Shares then in issue;

(e) the Warrants will be transferable in integral multiples of HK$1,000;

(f) in the event that a notice is given by Hang Ten to its shareholders to convene a shareholders’ meeting for the purposes of considering and, if thought fit, approving a resolution to voluntarily wind up Hang Ten, Hang Ten shall forthwith give notice thereof to each holder of the Warrants and thereupon, every holder of the Warrants shall be entitled by irrevocable surrender of his Warrant certificate(s) to Hang Ten (such surrender to occur not later than two business days prior to the proposed shareholders’ meeting referred to above) together with the duly completed subscription form(s) and payment of the subscription price or the relevant portion thereof, to exercise the subscription rights represented by such Warrant and Hang Ten shall, as soon as possible and, in any event, no later than the day immediately prior to the date of the proposed shareholders’ meeting, allot to the holder of the Warrants, such number of Hang Ten Shares which fall to be issued pursuant to the exercise of the subscription rights represented by such Warrant. Hang Ten shall give notice to the holder of the Warrants of the passing of such resolution within seven days after the passing thereof. Thereafter, subject to the terms and conditions set out in the Warrant Instrument, all Warrants which have not been exercised by the date falling two business days prior to the proposed shareholders’ meeting referred to above, will lapse;

(g) a holder of the Warrants will not be entitled to participate in any distributions or offers of further securities made by Hang Ten by reason only of it being a holder of the Warrants;

Ð 120 Ð APPENDIX I SUMMARY OF THE TERMS OF THE WARRANTS AND CPS

(h) a holder of the Warrants will not be entitled to attend or vote at any general meetings of Hang Ten by reason only of it being a holder of the Warrants; and

(i) no application will be made for the listing of or permission to deal in the Warrants on the Stock Exchange or any other stock exchange.

PRINCIPAL TERMS OF THE CPS

The CPS will confer on its holders the rights and privileges and be subject to the restrictions set out in the bye-laws of Hang Ten. The principal rights and restrictions attaching to the CPS are summarised below.

(a) the CPS will confer upon its holder the right to receive, in priority to the holders of any other class of shares in the capital of Hang Ten, a fixed cumulative cash dividend payable on the principal amount outstanding under the CPS at the rate of 1% per annum;

(b) unless previously converted and subject as permitted under paragraph (d) below, a holder of the CPS may convert all or any part of the principal amount of the CPS into Hang Ten Shares at a conversion price of HK$0.001 each (subject to adjustments) at any time commencing on the Business Day after the date of issue of the CPS and all principal amount of the CPS that remains outstanding on the fifth anniversary of the date of issue of the CPS will be so converted mandatorily, unless such conversion is restricted as described in paragraph (d) below in which case the mandatory conversion date will automatically be extended for a successive periods of 2 years until such conversion is not so restricted;

(c) a holder of the CPS may not exercise the conversion rights attached to his CPS if such exercise would result in the number of Hang Ten Shares, which are in the hands of the public, falling below 25% or the relevant prescribed minimum percentage for Hang Ten as required by the Stock Exchange from time to time;

(d) on a return of capital on a winding-up or otherwise, the CPS will rank in priority to any other class of shares in the capital of Hang Ten provided that the assets of Hang Ten available for distribution to its members will be applied first towards arrears or accruals of the fixed dividend payable on the CPS before repaying the capital paid up on any CPS or any other class of shares in the capital of Hang Ten;

(e) all Hang Ten Shares to be issued on conversion of the CPS will be issued free from all claims, charges, lien, encumbrances and equities and be identical and will rank pari passu in all respects with the Hang Ten Shares then in issue;

(f) a holder of the CPS will not be entitled to attend or vote at any general meetings of Hang Ten by reason only of it being a holder of the CPS, except at a general meeting of the holders of the CPS held to vary or abrogate the rights of the holders of CPS;

Ð 121 Ð APPENDIX I SUMMARY OF THE TERMS OF THE WARRANTS AND CPS

(g) no application will be made for the listing of or permission to deal in any of the CPS on the Stock Exchange or any other stock exchange; and

(h) the CPS may be assigned or transferred with the prior approval from the Stock Exchange, if so required.

Ð 122 Ð APPENDIX II ACCOUNTANTS’ REPORT

The following is the full text of a report, prepared for the purpose of incorporation in this document, received from the independent reporting accountants of Hang Ten Group Holdings Limited, KPMG, Certified Public Accountants, Hong Kong. As described in the section headed “Documents available for Inspection” in Appendix VII, a copy of the accountants’ report is available for inspection.

8th Floor Prince’s Building 10 Chater Road Central Hong Kong

The Directors Hang Ten Group Holdings Limited Kim Eng Capital (Hong Kong) Limited Asian Capital (Corporate Finance) Limited

31 October 2002

Dear Sirs,

We set out below our report on the financial information relating to “Hang Ten Group Holdings Limited” (“Hang Ten”) and the companies (collectively the “Subsidiaries”) to be acquired pursuant to the sale and purchase agreement dated 28 October 2002 (“Sale and Purchase Agreement”) as described more fully in the paragraph headed “Acquisition of Hang Ten (BVI) by Hang Ten” in the section headed “Summary of the Proposal” (the “Proposal”) of the document dated 31 October 2002 (the “Document”) issued in connection with the proposal for Akai Holdings Limited (in compulsory liquidation) (“Akai”) by way of a shareholders’ scheme of arrangement and withdrawal of the listing of the shares of Akai and the listing of the ordinary shares of Hang Ten on The Stock Exchange of Hong Kong Limited by way of introduction. The financial information includes the summaries of the combined income statements and cash flow statements of Hang Ten and its Subsidiaries (“Hang Ten Group”) for each of the three years ended 31 March 2002 (the “relevant period”), and of the combined balance sheets of the Hang Ten Group as at 31 March 2000, 2001 and 2002 (the “Financial Information”) which have been prepared by the directors of Hang Ten on the basis set out in section A of this report for inclusion in the Document. Terms used herein have the same meaning ascribed to them in the “Definitions” section of the Document unless otherwise stated.

Hang Ten was incorporated in Bermuda on 17 July 2002 as an exempted company with limited liability under the Companies Amendment Act 2001 of Bermuda. On completion of the Sale and Purchase Agreement, Hang Ten will become the holding company of the Subsidiaries set out in Section A of this report.

We have acted as auditors of the companies comprising the Hang Ten Group for the relevant period (or since their respective dates of incorporation where this is a shorter period), except for ILC Trademark Corporation, ILC (Cyprus) Limited, ILC (Hungary) Limited, HTIL Holdings Corporation N.V., HTIL Corporation, B.V., International Licensing (California) Corp, Hang Ten (Phils) Holdings Corporation and

Ð 123 Ð APPENDIX II ACCOUNTANTS’ REPORT

Chinaway Trading Co., Ltd. No audited financial statements have been prepared for these companies as there are no statutory audit requirements in the respective countries in which they are incorporated. As a basis for forming an opinion on the Financial Information of the Hang Ten Group for the purpose of this report, we have carried out appropriate audit procedures in respect of the management accounts of these companies for the relevant period (or since their respective dates of incorporation where this is a shorter period). The management accounts of these companies have been restated by the directors of Hang Ten to conform with accounting principles generally accepted in Hong Kong for the purpose of the preparation of the Financial Information.

No audited financial statements have been prepared by Hang Ten since its incorporation as it has not carried on any business save for the proposed transactions relating to the Proposal. We have, however, reviewed all significant transactions of Hang Ten from its date of incorporation to 31 October 2002 for the purpose of this report.

For the purpose of this report, we have examined the audited financial statements or, where appropriate, unaudited management accounts of the respective companies comprising the Hang Ten Group for the relevant period or since their respective dates of incorporation where this is a shorter period and we have carried out such additional procedures as we consider necessary in accordance with the Auditing Guideline “Prospectuses and the Reporting Accountant” issued by the Hong Kong Society of Accountants. We have not audited any financial statements of the companies comprising the Hang Ten Group in respect of any period subsequent to 31 March 2002.

The Financial Information as set out in this report has been prepared by the directors of Hang Ten based on the audited financial statements or, where appropriate, unaudited management accounts of Hang Ten Group and of its Subsidiaries, on the basis set out in Section A of this report, after making such adjustments as are appropriate.

The directors of the respective companies of the Hang Ten Group are responsible for the preparation of the respective audited financial statements or where audited financial statements are not prepared, management accounts, which give a true and fair view. The directors of Hang Ten are responsible for the preparation of the Financial Information which give a true and fair view. In preparing the audited financial statements, management accounts and Financial Information which give a true and fair view, it is fundamental that appropriate accounting policies are selected and applied consistently, that judgements and estimates are made which are prudent and reasonable that the reasons for any significant departure from applicable accounting standards are stated.

It is our responsibility to form an independent opinion on the Financial Information.

In our opinion, the Financial Information set out below together with the notes thereto, for the purpose of this report and on the basis of presentation set out in Section A of this report, gives a true and fair view of the combined state of the Hang Ten Group’s affairs as at 31 March 2000, 2001 and 2002 and of its combined results and cash flows for each of the three years ended 31 March 2002.

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A. BASIS OF PRESENTATION

History of corporate reorganisations

As described in the paragraph headed “History and development of the Hang Ten (BVI) Group” in the section headed “Letter from the Board of Directors of Hang Ten Group Holdings Limited” of the Document, ILC International Corporation (“ILC”) was established in 1994 and acted as a holding company of its then existing subsidiaries until the completion of a corporate reorganisation on 31 December 2001 as described below.

On 9 November 2001, certain shareholders who together held 97.01% of the issued share capital of ILC entered into an agreement to sell their respective interests in ILC to Hang Ten International Holdings Limited (“Hang Ten (BVI)”) for a total consideration of approximately US$54.6 million. On 9 November 2001, these shareholders also entered into a subscription agreement with Hang Ten (BVI) pursuant to which they agreed to subscribe for and Hang Ten (BVI) agreed to issue a total of 999,999 new shares of US$0.1 each in the share capital of Hang Ten (BVI) at US$17 per share for a total subscription price of approximately US$17 million. The acquisition of ILC was financed by the subscription proceeds of US$17 million, shareholders’ loans of US$20 million and bank loans of US$17.6 million. Upon completion of this reorganisation on 31 December 2001, Hang Ten (BVI) became the holding company of ILC.

On 28 March 2002, ILC disposed of the entire issued share capital of Hang Ten (China) Group Limited (“Hang Ten China”), a company incorporated in British Virgin Islands (“BVI”), to Accurate Sino Developments Limited, for a cash consideration of US$20,000 as part of the corporate reorganisation in preparation of the listing of the shares of Hang Ten on The Stock Exchange of Hong Kong Limited. Accurate Sino Developments Limited is a company in which the then existing shareholders of Hang Ten (BVI) collectively hold an indirect interest of 97.01%. As a result of this disposal, Hang Ten China ceased to be a subsidiary of ILC on 28 March 2002.

Presentation of Financial Information

The summaries of the Hang Ten Group’s combined income statements and cash flow statements for each of the two years ended 31 March 2001 include the results and cash flows of ILC and its subsidiaries as if Hang Ten had been the holding company of these companies throughout this period or since the respective dates of their incorporation, where this is a shorter period. The Hang Ten Group’s combined balance sheets as at 31 March 2000 and 2001 have been prepared to present the state of affairs of ILC and its subsidiaries as if Hang Ten had been the holding company of these companies as at the respective dates.

The summaries of the Hang Ten Group’s combined income statement and cash flow statement for the year ended 31 March 2002 include the results and cash flows of Hang Ten (BVI) and its subsidiaries as if Hang Ten had been the holding company of these companies throughout this period or since the respective dates of their incorporation, where this is a shorter period.

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The combined balance sheet of the Hang Ten Group as at 31 March 2002 has been prepared to present the state of affairs of Hang Ten (BVI) and its subsidiaries as if Hang Ten had been the holding company of these companies as at this date. The excess of the cost of acquisition of ILC by Hang Ten (BVI) over the fair value of the identifiable assets and liabilities acquired are accounted for as goodwill in the combined balance sheet as at 31 March 2002.

The Financial Information excludes the results and cash flows of Hang Ten China for the relevant period and its net assets as at 31 March 2000 and 2001 as if the disposal of Hang Ten China had been completed on 1 April 1999.

All significant intercompany transactions and balances have been eliminated on combination.

On completion of the Sale and Purchase Agreement, the following companies will become direct or indirect subsidiaries of Hang Ten:

Issued and Percentage of equity Place of Date of fully paid interest attributable Principal Name incorporation incorporation share capital to the Hang Ten Group activities Direct Indirect

Hang Ten British Virgin 10 September US$100,000 100% Ð Investment holding International Islands 2001 Holdings (“BVI”) Limited

ILC BVI 12 September US$639,830 Ð 97% Investment holding International 1994 Corporation

Hang Ten BVI 2 November US$50,000 Ð 97% Investment holding Enterprises 1994 Limited

Chinaway Trading BVI 5 April 2001 US$50,000 Ð 97% Trading of apparels Co., Ltd.

Yangtze Apparel Taiwan 9 November NT$100,000,000 Ð 97% Retail and wholesale Taiwan 1991 of apparels Enterprise Limited

Hang Ten (Phils) BVI 10 May 1996 US$50,000 Ð 97% Investment holding Holdings Corporation

Ð 126 Ð APPENDIX II ACCOUNTANTS’ REPORT

Issued and Percentage of equity Place of Date of fully paid interest attributable Principal Name incorporation incorporation share capital to the Hang Ten Group activities Direct Indirect

Hang Ten Phils., Philippines 15 July 1996 PHP50,000,000 Ð 53.4% Retail and Corp wholesale of apparels

Hang Ten Singapore 29 September SGD1,000,000 Ð 97% Retail and Enterprises 1999 wholesale of (Pte) Ltd. apparels

Hang Ten Korea 6 December KRW6,000,000,000 Ð 89.3% Retail and Korea 2000 wholesale of Corp. (Note) apparels

Hang Ten Malaysia 27 July 2002 RM500,000 Ð 97% Retail and wholesale Enterprises (M) of apparels Sdn Bhd

ILC Trademark BVI 1 December US$50,000 Ð 97% Trademark Corporation 1999 ownership and licensing

ILC (Cyprus) Limited Cyprus 8 May 1997 Cypriot Ð 97% Investment holding pounds 1,000

ILC (Hungary) Limited Hungary 12 May 1997 US$6,400 Ð 97% Trademark licensing

HTIL Holdings Netherlands 21 December US$6,000 Ð 97% Investment holding Corporation N.V. Antilles 1992

HTIL The Netherlands 10 July 1992 NLG40,000 Ð 97% Trademark licensing Corporation, B.V.

International United States 10 January 1996 US$10,000 Ð 97% Trademark Licensing of America licensing and (California) management Corp

Note: As at 31 March 2002, the issued and fully paid share capital of Hang Ten Korea Corp. was KRW1,600 million and the percentage of equity interest attributable to the Hang Ten Group was 67.9%. In October 2002, ILC agreed to subscribe for 440,000 new shares in Hang Ten Korea Corp. for a cash consideration of KRW4,400 million (equivalent to US$3.6 million). Following the subscription, Hang Ten Group’s effective equity interest in Hang Ten Korea Corp. is increased from 67.9% as at 31 March 2002 to 89.3%.

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B. COMBINED AUDITED FINANCIAL STATEMENTS

Combined income statements

The following is a summary of the combined income statements of the Hang Ten Group for the relevant period, after making such adjustments as are appropriate and on the basis set out in Section A of this report:

Year ended 31 March 2000 2001 2002 Note US$’000 US$’000 US$’000

Turnover 2 145,119 145,946 159,346 Cost of sales (74,483) (73,216) (80,300)

70,636 72,730 79,046 Other revenue 3 2,426 2,929 2,834 Other net income/(loss) 3 738 55 (227) Selling expenses (52,890) (55,373) (62,632) Administrative expenses (6,256) (5,784) (5,574) Other operating expenses (1,371) (1,757) (1,716)

Profit from operations 13,283 12,800 11,731 Finance costs 4(a) (14) (287) (1,025)

Profit from ordinary activities before taxation 4 13,269 12,513 10,706 Taxation 5(a) (1,796) (1,192) (1,126)

Profit from ordinary activities after taxation 11,473 11,321 9,580 Minority interests (540) (469) (1,020)

Profit attributable to shareholders 10,933 10,852 8,560

Dividends attributable to the year: 8 Interim dividend declared during the year Ð 1,504 Ð Final dividend proposed after balance sheet date 7,021 Ð Ð Special dividend Ð 26,534 Ð

7,021 28,038 Ð

Basic earnings per share 9 0.040 cent 0.040 cent 0.032 cent

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Combined statement of recognised gains and losses

The following is a summary of the combined statement of recognised gains and losses of the Hang Ten Group for the relevant period, after making such adjustments as are appropriate and on the basis set out in Section A of this report:

Year ended 31 March 2000 2001 2002 Note US$’000 US$’000 US$’000

Net profit for the year 10,933 10,852 8,560 Exchange differences on translation of the financial statements of foreign entities 24 1,569 (1,422) (192)

Total recognised gains and losses 12,502 9,430 8,368

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Combined balance sheets

The following is a summary of the combined balance sheets of the Hang Ten Group as at 31 March 2000, 2001 and 2002, after making such adjustments as are appropriate and on the basis set out in Section A of this report:

At 31 March 2000 2001 2002 Note US$’000 US$’000 US$’000

Non-current assets Fixed assets 10 5,851 5,672 5,324 Goodwill 11 Ð Ð 10,001 Intangible assets 12 22,062 20,395 19,209 Long-term receivable Ð 244 Ð Employee benefits 19 Ð 14 82 Deferred taxation 21 449 207 230

28,362 26,532 34,846

Current assets Investments 13 13,385 Ð 5,429 Inventories 14 12,546 13,136 16,429 Trade and other receivables 15 11,428 12,722 17,598 Amounts due from related companies 20 14 Ð 1,656 Cash and cash equivalents 16 10,523 14,862 8,053

47,896 40,720 49,165

Current liabilities Bank loans 17 Ð 12,150 13,058 Trade and other payables 18 9,963 13,321 12,954 Amounts due to related companies 20 969 1,012 644 Taxation 5(b) 1,097 1,016 1,069

12,029 27,499 27,725

Net current assets 35,867 13,221 21,440

Total assets less current liabilities carried forward 64,229 39,753 56,286

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At 31 March 2000 2001 2002 Note US$’000 US$’000 US$’000

Total assets less current liabilities brought forward 64,229 39,753 56,286

Non-current liabilities Bank loans 17 Ð Ð 15,086 Employee benefits 19 107 Ð Ð Other loans 22 Ð 331 20,497

107 331 35,583

Minority interests 2,195 1,880 2,850

NET ASSETS 61,927 37,542 17,853

CAPITAL AND RESERVES Share capital 23 638 640 100 Reserves 24 61,289 36,902 17,753

61,927 37,542 17,853

Ð 131 Ð APPENDIX II ACCOUNTANTS’ REPORT

Combined cash flow statements

The following is a summary of the combined cash flow statements of the Hang Ten Group for the relevant period, after making such adjustments as are appropriate and on the basis set out in Section A of this report:

Year ended 31 March 2000 2001 2002 Note US$’000 US$’000 US$’000

Net cash inflow/(outflow) from operating activities 25(a) 18,452 30,287 (1,173)

Returns on investments and servicing of finance Interest received 573 478 339 Interest paid Ð (253) (697) Dividends paid Ð (35,059) Ð

Net cash inflow/(outflow) from returns on investments and servicing of finance 573 (34,834) (358)

Taxation Taiwan income tax (566) (932) (666) Income tax in other countries (12) (117) (449)

(578) (1,049) (1,115)

Investing activities Payment for purchase of fixed assets (2,472) (3,496) (3,167) Payment for purchase of trademarks (14,031) Ð Ð Proceeds from sales of trademarks 2,200 464 Ð Acquisition of subsidiary 25(b) Ð Ð (54,619)

Net cash outflow from investing activities (14,303) (3,032) (57,786)

Net cash inflow/(outflow) before financing carried forward 4,144 (8,628) (60,432)

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Year ended 31 March 2000 2001 2002 Note US$’000 US$’000 US$’000

Net cash inflow/(outflow) before financing brought forward 4,144 (8,628) (60,432)

Financing activities New bank loans 25(c) Ð Ð 18,858 New shareholders’ loans 25(c) Ð Ð 20,000 Issue of new shares 25(c) Ð 192 17,000 Loans from minority shareholder Ð 331 166 Capital contribution from minority shareholder Ð 404 Ð

Net cash inflow from financing activities Ð 927 56,024

Increase/(decrease) in cash and cash equivalents 4,144 (7,701) (4,408)

Effect of foreign exchange rates 55 (110) 463

Cash and cash equivalents brought forward 6,324 10,523 2,712

Cash and cash equivalents carried forward 10,523 2,712 (1,233)

Analysis of the balances of cash and cash equivalents

Cash at bank and in hand 10,523 14,862 8,053 Bank loans and overdrafts payable within three months from the date of the advance Ð (12,150) (9,286)

10,523 2,712 (1,233)

Ð 133 Ð APPENDIX II ACCOUNTANTS’ REPORT

Notes to the Financial Information

1. Significant accounting policies

(a) Statement of compliance

The Financial Information has been prepared in accordance with the accounting policies set out below. These accounting policies would be acceptable under accounting principles generally accepted in Hong Kong. The information conforms with the disclosure requirements of the Rules governing the Listing of securities on the Main Board of The Stock Exchange of Hong Kong Limited (“Stock Exchange”) as applicable to Accountants’ Reports included in Listing Documents.

(b) Basis of preparation of the Financial Information

The measurement basis used in the preparation of the Financial Information is historical cost modified by the marking to market of certain investments in securities as explained in the accounting policies set out below.

Positive goodwill arising on acquisition of a subsidiary represents the excess of the cost of the acquisition over the fair value of the identifiable assets and liabilities acquired. Positive goodwill is stated in the combined balance sheets at cost less any accumulated amortisation and any impairment losses. Positive goodwill is amortised to the combined income statements on a straight-line basis over its estimated useful life.

On disposal of a subsidiary during the period, any attributable amount of purchased goodwill not previously amortised through the combined income statements is included in the calculation of the profit or loss on disposal.

(d) Investments in securities

The Hang Ten Group’s investments in securities are stated in the combined balance sheets at fair value. Changes in fair value are recognised in the combined income statements as they arise. Securities are presented as trading securities when they were acquired principally for the purpose of generating a profit from short term fluctuations in price or dealer’s margin.

Profit or losses on disposal of investments in securities are determined as the difference between the estimated net disposal proceeds and the carrying amount of the investments and are accounted for in the combined income statements as they arise.

(e) Fixed assets

(i) Fixed assets are carried in the combined balance sheets at cost less accumulated depreciation and impairment losses.

(ii) Subsequent expenditure relating to a fixed asset that has already been recognised is added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the Hang Ten Group. All other subsequent expenditure is recognised as an expense in the period in which it is incurred.

(iii) Gains or losses arising from the retirement or disposal of a fixed asset are determined as the difference between the estimated net disposal proceeds and the carrying amount of the asset and are recognised in the combined income statements on the date of retirement or disposal.

(f) Intangible assets (other than goodwill)

(i) Intangible assets that are acquired by the Hang Ten Group are stated in the combined balance sheets at cost less accumulated amortisation and impairment losses. Expenditure on internally generated goodwill and brands is recognised as an expense in the period in which it is incurred.

Ð 134 Ð APPENDIX II ACCOUNTANTS’ REPORT

(ii) Subsequent expenditure on an intangible asset after its purchase or its completion is recognised as an expense when it is incurred unless it is probable that this expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standard of performance and this expenditure can be measured and attributed to the asset reliably. If these conditions are met, the subsequent expenditure is added to the cost of the intangible asset.

(g) Operating lease charges

Where the Hang Ten Group has the use of assets under operating leases, payments made under the leases are charged to the combined income statements in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognised in the combined income statements as an integral part of the aggregate net lease payments made. Contingent rentals are charged to the combined income statements in the accounting period in which they are incurred.

(h) Amortisation and depreciation

(i) No depreciation is provided on freehold land.

(ii) Depreciation is calculated to write off the cost of fixed assets over their estimated useful lives as follows:

Ð buildings are depreciated on a straight line basis over their estimated useful lives, being 55 years from the date of completion.

Ð other fixed assets are depreciated on a straight-line basis over their estimated useful lives at the following rates:

Furniture, fixtures and other fixed assets 2 to 10 years Motor vehicles 5 years

(iii) Intangible assets (other than goodwill)

Amortisation of intangible assets is charged to the combined income statements on a straight-line basis over the assets’ estimated useful lives as follows:

Trademarks 20 years

(iv) Positive goodwill

Amortisation of positive goodwill is charged to the combined income statements on a straight-line basis over its estimated useful life of 20 years.

(i) Impairment of assets

Internal and external sources of information are reviewed at each balance sheet date to identify indications that the following assets may be impaired or an impairment loss previously recognised no longer exists or may have decreased:

Ð fixed assets;

Ð intangible assets; and

Ð positive goodwill

If any such indication exists, the asset’s recoverable amount is estimated. For intangible assets that are not yet available for use, or are amortised over more than 20 years from the date when the asset is available for use or goodwill that is amortised over 20 years from initial recognition, the recoverable amount is estimated at each balance sheet date. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.

Ð 135 Ð APPENDIX II ACCOUNTANTS’ REPORT

(i) Calculation of recoverable amount

The recoverable amount of an asset is the greater of its net selling price 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 time value of money and the risks specific to the asset. Where there are assets that do not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

(ii) Reversals of impairment losses

In respect of assets other than goodwill, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is reversed only if the loss was caused by a specific external event of an exceptional nature that is not expected to recur, and the increase in recoverable amount relates clearly to the reversal of the effect of that specific event.

A reversal of impairment losses is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognised in prior years. Reversals of impairment losses are credited to the combined income statements in the year in which the reversals are recognised.

(j) Inventories

Inventories are carried at the lower of cost and net realisable value.

Cost is calculated using the weighted average formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Net realisable 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.

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

(k) Cash equivalents

Cash equivalents are short-term, highly liquid investments which are readily convertible into known amounts of cash without notice and which were within three months of maturity when acquired. For the purpose of the combined cash flow statements, cash equivalents would also include bank overdrafts and advances from bank repayable within three months from the date of the advance.

(l) Deferred taxation

Deferred taxation is provided using the liability method in respect of the taxation effect arising from all material timing differences between the accounting and tax treatment of income and expenditure, which are expected with reasonable probability to crystallise in the foreseeable future.

Future deferred tax benefits are not recognised unless their realisation is assured beyond reasonable doubt.

(m) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Hang Ten Group has a 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.

Ð 136 Ð APPENDIX II ACCOUNTANTS’ REPORT

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 of economic benefits 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 of economic benefits is remote.

(n) Revenue recognition

Provided it is probable that the economic benefits will flow to the Hang Ten Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in the combined income statements as follows:

(i) Sale of goods

Revenue is recognised when goods are delivered to the customers which is taken to be the point in time when the customer has accepted the goods and the related risks and rewards of ownership. Revenue excludes value added or other sales taxes and is after deduction of any trade discounts.

(ii) Royalty income

Royalty income is recognised in accordance with the substance of the relevant agreements.

(iii) Dividends

Ð Dividend income from unlisted investments is recognised when the shareholder’s right to receive payment is established.

Ð Dividend income from listed investments is recognised when the share price of the investment goes ex-dividend.

(iv) Interest income

Interest income from bank deposits is accrued on a time-apportioned basis by reference to the principal outstanding and the rate applicable.

(o) Translation of foreign currencies

Foreign currency transactions during the relevant period are translated into United States dollars at the exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into United States dollars at the exchange rates ruling at the balance sheet date. Exchange gains and losses are dealt with in the combined income statements.

The results and balance sheet items of subsidiaries denominated in foreign currencies are translated into United States dollars at average exchange rates during the period and the exchange rates ruling at the balance sheet date respectively. Exchange differences arising on combination of these subsidiaries are dealt with as a movement in reserves.

Foreign exchange forward contracts undertaken for hedging purposes are accounted for on an equivalent basis to the underlying assets, liabilities or net positions. Any profit or loss arising is recognised on the same basis as that arising from the related assets, liabilities or positions.

(p) Retirement costs

The Hang Ten Group’s Taiwan subsidiaries participate in a central pension scheme providing benefits to all employees in accordance with the Labour Standards Law (as amended) in Taiwan. The Hang Ten Group has an obligation to ensure that there are sufficient funds in the scheme to pay the benefits earned. The Hang Ten Group currently contributes at 2% of the total salaries as determined and approved by the relevant government authorities. The contributions are placed with the Central Trust of China, a government institution.

The Hang Ten Group’s net obligation in respect of the pension scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine the present value, and the fair value of any plan assets is deducted. The calculation is performed by a qualified actuary using the projected unit credit method. An actuarial valuation as at 31 March 2002 was carried out by Dr. Lin (林中君), who is a Fellow of Actuarial Institute of Republic of China (中華民國精算學會正會員).

Ð 137 Ð APPENDIX II ACCOUNTANTS’ REPORT

When the benefits of a scheme are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the combined income statements on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the combined income statements.

In calculating the Hang Ten Group’s obligation in respect of a scheme, to the extent that any cumulative unrecognised actuarial gain or loss exceeds 10% of the greater of the present value of the pension scheme obligation and the fair value of plan assets, that portion is recognised in the combined income statements over the expected average remaining working lives of the employees participating in the scheme. Otherwise, the actuarial gain or loss is not recognised.

Where the calculation results in a benefit to the Hang Ten Group, the recognised asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the scheme or reductions in future contributions to the scheme.

For other non-Taiwan subsidiaries, contributions to the defined contribution pension schemes are recognised as an expense in the combined income statements as incurred.

(q) Borrowing costs

Borrowing costs are expensed in the combined income statements in the period in which they are incurred.

(r) Related parties

For the purposes of this report, parties are considered to be related to the Hang Ten Group if the Hang Ten Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Hang Ten Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

(s) Segment reporting

A segment is a distinguishable component of the Hang Ten Group that is engaged either in providing products or 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 Hang Ten Group’s internal financial reporting, the Hang Ten Group has chosen geographical segment information as the primary reporting format and business segment information as the secondary reporting format.

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 that segment. For example, segment assets may include inventories, trade receivables and other fixed assets. Segment revenue, expenses, assets, and liabilities are determined before intra-group balances and intra-group transactions are eliminated as part of the combination 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 on 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.

Unallocated items mainly comprise financial and corporate assets, interest-bearing loans, borrowings, corporate and financing expenses and minority interests.

Ð 138 Ð APPENDIX II ACCOUNTANTS’ REPORT

2. Turnover

The principal activities of the Hang Ten Group are designing, marketing and sale of apparel and accessories under the brand name of “Hang Ten”.

Turnover represents the sales value of goods supplied to customers and royalty income. The amount of each significant category of revenue recognised in turnover during the relevant period is as follows:

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Sales of apparels 140,182 141,704 155,469 Royalty income 4,937 4,242 3,877

145,119 145,946 159,346

3. Other revenue and net income/(loss)

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Other revenue Rental income 375 715 679 Bank interest income 573 478 339 Claims receivable from suppliers 653 359 472 Others 825 1,377 1,344

2,426 2,929 2,834

Other net income/(loss) Net loss on disposal of fixed assets (169) (117) (292) Net exchange gain/(loss) 577 (163) 62 Net realised and unrealised gains on listed funds carried at fair value 364 259 Ð Others (34) 76 3

738 55 (227)

4. Profit from ordinary activities before taxation

Profit from ordinary activities before taxation is arrived at after charging:

(a) Finance costs

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Interest on bank advances and other borrowings wholly repayable within five years (Note) Ð 253 697 Interest on shareholders’ loans (Note) Ð Ð 300 Other borrowing costs 14 34 28

14 287 1,025

Note: As described in Section A of this report, the acquisition of ILC by Hang Ten (BVI) was partly financed by bank loans and shareholders’ loans of US$17.6 million and US$20 million respectively and the acquisition was completed on 31 December 2001. Accordingly, finance costs for the year ended 31 March 2002 include interest payable on these loans for the period from 1 January 2002 to 31 March 2002. If the acquisition of ILC had been completed on 1 April 1999 and the loans had been in existence throughout the relevant period, finance costs for each of the three years ended 31 March 2002 would have increased by approximately US$1.9 million, US$1.9 million, and US$1.4 million respectively on the assumption that the prevailing interest rates during the period from 1 January 2002 to 31 March 2002 are also applicable to the prior periods.

Ð 139 Ð APPENDIX II ACCOUNTANTS’ REPORT

(b) Other items

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Cost of inventories 74,483 73,216 80,300 Staff costs Ð Salaries and staff benefits 18,955 19,015 18,977 Ð Retirement costs (Taiwan) 153 160 174 Ð Retirement costs (other countries) Ð 67 37 Auditors’ remuneration 132 139 149 Amortisation of positive goodwill Ð Ð 120 Amortisation of trademarks 711 1,203 1,186 Depreciation 2,062 2,816 2,838 Operating lease charges (including retail shops and department store counters) 23,000 26,065 25,669 Commission to franchisees 1,320 2,041 8,544 Provision for inventories 1,860 794 1,471 Provision for bad debts 200 100 100

5. Taxation

(a) Taxation in the combined income statements represent:

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Current income tax Ð Hong Kong profits tax Ð Ð Ð Ð Taiwan income tax 1,314 751 25 Ð Income tax in other countries 202 217 1,143

1,516 968 1,168

Deferred taxation Ð Taiwan 225 190 (48) Ð other countries 55 34 6

280 224 (42)

1,796 1,192 1,126

No Hong Kong profits tax has been provided as the Hang Ten Group had no assessable profits in Hong Kong for each of the three years ended 31 March 2002.

The Taiwan income tax for each of the three years ended 31 March 2002 represents the income tax charged at a rate of 25% on the taxable income of the Taiwan subsidiaries. Taxation for non-Taiwan subsidiaries is similarly charged at the appropriate current rates of taxation ruling in the relevant countries.

(b) Taxation in the combined balance sheets represent:

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Income tax payable Ð Taiwan 907 726 85 Ð other countries 190 290 984

1,097 1,016 1,069

Ð 140 Ð APPENDIX II ACCOUNTANTS’ REPORT

6. Directors’ remuneration

Details of directors’ remuneration are as follows:

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Fees ÐÐÐ Salaries and other emoluments 220 220 285 Discretionary bonuses 99 120 76 Retirement scheme contributions 2 2 3

321 342 364

Number of directors 4 4 4

The remuneration of the directors is within the following bands:

Year ended 31 March 2000 2001 2002 Number Number Number

Nil Ð US$ 128,205 (equivalent to HK$1,000,000) 2 2 2

US$128,206 Ð US$192,308 (equivalent to HK$1,000,001 Ð HK$1,500,000) 2 2 2

444

Save as disclosed above, no directors’ remuneration has been paid or is payable by the Hang Ten Group during the relevant period. There was no arrangement under which a director waived or agreed to waive any remuneration during the relevant period.

7. Individuals with highest emoluments

The five highest paid individuals of the Hang Ten Group during the relevant period include two directors of Hang Ten whose remuneration are disclosed in note 6 above. The aggregate of the emoluments in respect of the other three individuals are as follows:

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Salaries and emoluments 1,287 1,347 1,336 Discretionary bonuses 41 67 93 Retirement scheme contributions Ð Ð Ð

1,328 1,414 1,429

Ð 141 Ð APPENDIX II ACCOUNTANTS’ REPORT

The emoluments of the three individuals with the highest emoluments are within the following bands:

Year ended 31 March 2000 2001 2002 Number Number Number

Nil Ð US$ 128,205 (equivalent to HK$1,000,000) 1 1 Ð US$128,206 Ð US$192,308 (equivalent to HK$1,000,001 Ð HK$1,500,000) 2 2 3

333

During the relevant period, no emoluments were paid by the Hang Ten Group to the directors or any of the five highest paid individuals as an inducement, to join or upon joining the Hang Ten Group or as compensation for loss of office.

8. Dividends

(a) No dividends have been paid or declared by Hang Ten since its incorporation. Details of dividends paid by ILC to its then shareholders during each of the three years ended 31 March 2002 are set out in note 8(b) and (c) below.

(b) Dividends attributable to the year

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Interim dividend declared and paid Ð 1,504 Ð Final dividend proposed after the balance sheet date 7,021 Ð Ð Special dividend Ð 26,534 Ð

7,021 28,038 Ð

The final dividend proposed after the balance sheet date has not been recognised as a liability at the balance sheet date during the relevant period.

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Final dividend in respect of the previous financial year, approved and paid during the current year Ð 7,021 Ð

9. Basic earnings per share

The calculation of basic earnings per share for the relevant period is based on the profit attributable to shareholders for each of the three years ended 31 March 2002 and the 27,100 million shares in issue upon completion of the Proposal, as described in the paragraph headed “Shareholding Structure of Hang Ten” in the section headed “Summary of the Proposal” of the Document, as if the shares had been in issue since 1 April 1999.

Ð 142 Ð APPENDIX II ACCOUNTANTS’ REPORT

10. Fixed assets

Furniture, fixtures Land and Motor Leasehold and other buildings vehicles improvements fixed assets Total US$’000 US$’000 US$’000 US$’000 US$’000

Cost

At 1 April 1999 950 379 9,768 1,888 12,985 Exchange adjustments 84 25 1,124 224 1,457 Additions Ð 35 2,336 101 2,472 Disposals Ð (18) (3,883) (43) (3,944)

At 31 March 2000 1,034 421 9,345 2,170 12,970

Accumulated depreciation

At 1 April 1999 125 139 6,715 840 7,819 Exchange adjustments 12 30 807 164 1,013 Charge for the year 18 67 1,615 362 2,062 Written back on disposal Ð (14) (3,743) (18) (3,775)

At 31 March 2000 155 222 5,394 1,348 7,119

Net book value At 31 March 2000 879 199 3,951 822 5,851

Furniture, fixtures Land and Motor Leasehold and other buildings vehicles improvements fixed assets Total US$’000 US$’000 US$’000 US$’000 US$’000

Cost

At 1 April 2000 1,034 421 9,345 2,170 12,970 Exchange adjustments (214) (27) (592) (244) (1,077) Additions 158 41 2,729 568 3,496 Disposals (18) (35) (2,740) (261) (3,054)

At 31 March 2001 960 400 8,742 2,233 12,335

Accumulated depreciation

At 1 April 2000 155 222 5,394 1,348 7,119 Exchange adjustments (21) (15) (184) (115) (335) Charge for the year 5 25 2,441 345 2,816 Written back on disposal Ð (30) (2,676) (231) (2,937)

At 31 March 2001 139 202 4,975 1,347 6,663

Net book value

At 31 March 2001 821 198 3,767 886 5,672

Ð 143 Ð APPENDIX II ACCOUNTANTS’ REPORT

Furniture, fixtures Land and Motor Leasehold and other buildings vehicles improvements fixed assets Total US$’000 US$’000 US$’000 US$’000 US$’000

Cost

At 1 April 2001 960 400 8,742 2,233 12,335 Exchange adjustments (60) (22) (968) (84) (1,134) Additions Ð 46 2,511 610 3,167 Disposals Ð (9) (3,218) (28) (3,255)

At 31 March 2002 900 415 7,067 2,731 11,113

Accumulated depreciation

At 1 April 2001 139 202 4,975 1,347 6,663 Exchange adjustments (9) (12) (668) (60) (749) Charge for the year 4 49 2,385 400 2,838 Written back on disposal Ð (9) (2,941) (13) (2,963)

At 31 March 2002 134 230 3,751 1,674 5,789

Net book value

At 31 March 2002 766 185 3,316 1,057 5,324

(a) All land and buildings are located in Taiwan. The land is freehold.

(b) Land and buildings of the Hang Ten Group were revalued at NT$10,200,000 (equivalent to US$297,000) as at 31 August 2002 by an independent firm of valuers, Chesterton Petty Limited on an open market value basis. Such valuation gives rise to a revaluation deficit of US$470,000 based on net book value of the relevant assets at that date. Details of the valuation are set out in the valuation certificate in appendix IV to the Document.

11. Goodwill

Positive goodwill US$’000

Cost:

At 1 April 1999, 2000 and 2001 Ð Addition arising on acquisition of subsidiary 10,121

At 31 March 2002 10,121

Accumulated amortisation:

At 1 April 1999, 2000 and 2001 Ð Amortisation for the year ended 31 March 2002 120

At 31 March 2002 120

Carrying amount:

At 31 March 2002 10,001

At 31 March 2001 and 2000 Ð

Positive goodwill represents the excess of Hang Ten (BVI)’s share of the fair value of the identifiable assets and liabilities of ILC acquired over the cost of acquisition and is recognised as expense on a straight-line basis over 20 years. The amortisation of positive goodwill for the year is included in “other operating expenses” in the combined income statements.

Ð 144 Ð APPENDIX II ACCOUNTANTS’ REPORT

12. Intangible assets - trademarks

2000 2001 2002 US$’000 US$’000 US$’000

Cost At 1 April 13,000 24,323 23,715 Additions 14,031 Ð Ð Disposals (2,708) (608) Ð

At 31 March 24,323 23,715 23,715

Accumulated amortisation At 1 April 2,058 2,261 3,320 Charge for the year 711 1,203 1,186 Written back on disposal (508) (144) Ð

At 31 March 2,261 3,320 4,506

Net book value

At 31 March 22,062 20,395 19,209

The amortisation of trademarks for the year is included in “other operating expenses” in the combined income statements.

13. Investments

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Trading securities (at market value) Listed funds in Taiwan 13,385 Ð 5,429

14. Inventories

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Work in progress 122 76 Ð Finished goods 14,081 12,671 17,704 Goods in transit 203 1,183 196

14,406 13,930 17,900 Less: provision (1,860) (794) (1,471)

12,546 13,136 16,429

Included in the above are inventories stated, net of provisions, at net realisable value as follows:

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Inventories stated at net realisable value 2,182 1,730 2,010

Ð 145 Ð APPENDIX II ACCOUNTANTS’ REPORT

15. Trade and other receivables

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Trade debtors (net of provisions) 4,407 6,040 9,439 Deposits, prepayments and other receivables 7,021 6,682 8,159

11,428 12,722 17,598

The ageing analysis of trade debtors (net of provisions) is as follows:

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Current 3,848 4,096 5,894 1 to 3 months overdue 331 1,520 2,824 More than 3 months but less than 6 months overdue 228 424 210 More than 6 months but less than 1 year overdue Ð Ð 109 More than 1 year but less than 2 years overdue Ð Ð 402

4,407 6,040 9,439

Debts arising from wholesales of goods and royalty income are due within one to two months from the date of billing. Debtors with long overdue balances are requested to settle all outstanding balances before any further credit is granted.

16. Cash and cash equivalents

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Cash at bank and in hand 10,523 14,862 8,053

Ð 146 Ð APPENDIX II ACCOUNTANTS’ REPORT

17. Bank loans

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Bank loans and overdrafts Ð secured Ð Ð 18,858 Ð unsecured Ð 12,150 9,286

Ð 12,150 28,144

The bank loans were repayable as follows:

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Within 1 year or on demand Ð 12,150 13,058

After 1 year but within 2 years Ð Ð 7,543 After 2 years but within 5 years Ð Ð 7,543

Ð Ð 15,086

Ð 12,150 28,144

At 31 March 2002, a banking facility of US$19,000,000 is secured by the shares of ILC and the amount utilised at that date was US$18,858,000. Details of guarantees provided by certain shareholders of Hang Ten (BVI) in respect of the Hang Ten Group’s banking facilities are set out in note 29.

The secured bank loans as at 31 March 2002 include a loan of US$17.6 million borrowed by Hang Ten (BVI) to finance its acquisition of ILC as described in Section A of this report.

18. Trade and other payables

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Trade creditors 4,772 7,760 6,881 Bills payable 420 1,347 2,468 Accrued charges 2,694 2,986 2,045 Deposits received 452 480 662 Others 1,625 748 898

9,963 13,321 12,954

Credit terms obtained by the Hang Ten Group range from 30 to 45 days.

The ageing of trade creditors and bills payable is analysed as follows:

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Outstanding balances aged: Within 1 month or on demand 4,950 6,769 8,370 Between 1 month and 3 months 211 2,316 710 Between 4 months and 6 months 31 22 269

5,192 9,107 9,349

Ð 147 Ð APPENDIX II ACCOUNTANTS’ REPORT

19. Employee benefits

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Present value of funded obligations 223 422 660 Fair value of plan assets (52) (327) (563)

Present value of net obligations 171 95 97

Unrecognised transitional liabilities (64) (57) (52) Unrecognised actuarial losses Ð (52) (127)

Recognised liabilities/(assets) for defined benefit obligations 107 (14) (82)

Movements in the net liabilities/(assets) recognised in the combined balance sheets are as follows:

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Net liabilities/(assets) as at 1 April Ð 107 (14) Contributions received (49) (278) (244) Expenses recognised in the combined income statements 153 160 174 Exchange adjustments 3 (3) 2

Net liabilities/(assets) as at 31 March 107 (14) (82)

Expenses recognised in the combined income statements are as follows:

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Current service costs 146 156 172 Interest on obligations 4 14 24 Expected return on plan assets Ð (12) (25) Amortisation of actuarial losses and transitional liabilities 3 2 3

153 160 174

The expenses are recognised in the following line items in the combined income statements:

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Distribution expenses 150 147 162 Administrative expenses 3 13 12

153 160 174

Actual return on plan assets Ð 10 16

Ð 148 Ð APPENDIX II ACCOUNTANTS’ REPORT

Principal actuarial assumptions at the balance sheet dates (expressed as weighted averages) are as follows:

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Discount rate 6.5% 6.0% 4.5% Expected return on plan assets 6.5% 6.0% 4.5% Future salary increases 5.0% 5.0% 3.0%

20. Amounts due from/(to) related companies

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Amount due from Michel Rene Enterprises Limited 14 Ð 2 Amount due from Avon Dale Garments, Inc./Chua and company Ð Ð 4 Amount due from Hang Ten China Ð Ð 1,650

14 Ð 1,656

Amount due to Asian Wide Services Limited 744 748 618 Amount due to Global Inc. Ð 246 26 Amount due to Avon Dale Garments, Inc./Chua and company 225 18 Ð

969 1,012 644

The above balances are unsecured, interest free and repayable on demand. Details of related party transactions are summarised in note 30. Subsequent to 31 March 2002, Hang Ten China has repaid the outstanding balance due to the Hang Ten Group in full.

21. Deferred taxation

(a) Movements on deferred taxation are analysed as follows:

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

At 1 April 702 449 207 Effect of exchange rate changes 27 (18) (19) Transfer (to)/from combined income statements (note 5(a)) (280) (224) 42

At 31 March 449 207 230

(b) Major components of deferred taxation of the Hang Ten Group provided for are set out below:

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

General provisions 349 177 203 Others 100 30 27

449 207 230

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Future benefit of tax losses 453 488 911

The above deferred tax assets have not been recognised as the realisation of these assets in the foreseeable future is uncertain.

Ð 149 Ð APPENDIX II ACCOUNTANTS’ REPORT

22. Other loans At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Loans from shareholders Ð Ð 20,000 Loans from minority shareholder of subsidiary Ð 331 497

Ð 331 20,497

The loans from shareholders were borrowed by Hang Ten (BVI) to finance the acquisition of ILC. The loans are unsecured and interest bearing at an annual rate of 6%. Subsequent to 31 March 2002, Hang Ten Group repaid a total amount of US$3.6 million to the shareholders. The remaining balance of US$16.4 million is due for repayment in the year 2011 or earlier if an event of default occurs under the terms of the loan agreements.

The loans from the minority shareholder of a subsidiary are unsecured, interest free and will not be repayable within the next 12 months.

23. Share capital

For the purposes of this report, the share capital as at 31 March 2000 and 2001 represents the nominal value of the share capital of ILC which was the holding company as at the respective dates. The share capital as at 31 March 2002 represents the share capital of Hang Ten (BVI) which was the holding company as at 31 March 2002.

24. Reserves Capital Exchange Retained surplus reserve profits Total US$’000 US$’000 US$’000 US$’000

At 1 April 1999 18,016 (4,694) 35,465 48,787 Exchange differences on translation of financial statements of foreign entities Ð 1,569 Ð 1,569 Profit for the year Ð Ð 10,933 10,933

At 31 March 2000 18,016 (3,125) 46,398 61,289

At 1 April 2000 18,016 (3,125) 46,398 61,289 Exchange differences on translation of financial statements of foreign entities Ð (1,422) Ð (1,422) Issue of shares 190 Ð Ð 190 Profit for the year Ð Ð 10,852 10,852 Dividends Ð Ð (34,007) (34,007)

At 31 March 2001 18,206 (4,547) 23,243 36,902

At 1 April 2001 18,206 (4,547) 23,243 36,902 Profit for the year Ð Ð 8,560 8,560 Exchange differences on translation of financial statements of foreign entities Ð (192) Ð (192) Reversal on corporate reorganisation (note (d)) (18,206) 4,798 (31,009) (44,417) Issue of shares 16,900 Ð Ð 16,900

At 31 March 2002 16,900 59 794 17,753

(a) Distributable reserves

Hang Ten was incorporated on 17 July 2002 and has not carried out any business since the date of its incorporation save for the proposed transactions relating to the Proposal. Accordingly, there were no reserves available for distribution to shareholders as at the date of this report.

Ð 150 Ð APPENDIX II ACCOUNTANTS’ REPORT

(b) Capital surplus

Capital surplus represents the excess of the consideration received over the nominal value of the shares issued.

(c) The exchange reserve has been set up and will be dealt with in accordance with the accounting policy adopted for foreign currency translation.

(d) As described in section A of this report, Hang Ten (BVI) became the holding company on 31 December 2001 pursuant to a corporate reorganisation. Accordingly, all reserves up to the date of acquisition have been treated as pre-acquisition reserves.

25. Notes to the combined cash flow statements

(a) Reconciliation of profit from operations to net cash inflow/(outflow) from operating activities

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Profit from operations 13,283 12,800 11,731 Interest income (573) (478) (339) Depreciation 2,062 2,816 2,838 Amortisation of trademarks and goodwill 711 1,203 1,306 Net loss on disposal of fixed assets 169 117 292 Net realised and unrealised gains on listed funds carried at fair value (364) (259) Ð (Increase)/decrease in long-term receivable Ð (244) 244 Decrease/(increase) in inventories 3,748 (590) (3,293) (Increase)/decrease in listed funds (5,151) 13,644 (5,429) Decrease/(increase) in trade and other receivables 3,546 (1,294) (4,876) (Increase)/decrease in amounts due from related companies (12) 14 (1,656) (Decrease)/increase in trade and other payables (852) 3,358 (367) Increase/(decrease) in amounts due to related companies 526 43 (368) Increase/(decrease) in employee benefits 107 (121) (68) Foreign exchange 1,252 (722) (1,188)

Net cash inflow/(outflow) from operating activities 18,452 30,287 (1,173)

(b) This represents the consideration paid by Hang Ten (BVI) for the acquisition of 97.01% of the issued share capital in ILC as described in section A of this report.

Shareholders’ Share capital Capital surplus Bank loans loans US$’000 US$’000 US$’000 US$’000

At 1 April 1999 and at 31 March 2000 638 18,016 Ð Ð

At 1 April 2000 638 18,016 Ð Ð Cash flows from financing 2 190 Ð Ð

At 31 March 2001 640 18,206 Ð Ð

At 1 April 2001 640 18,206 Ð Ð Reversal on corporate reorganisation (note 24 (d)) (640) (18,206) Ð Ð Cash flows from financing 100 16,900 18,858 20,000

At 31 March 2002 100 16,900 18,858 20,000

Ð 151 Ð APPENDIX II ACCOUNTANTS’ REPORT

26. Net assets of Hang Ten

On the basis of presentation as set out in section A of this report, the net assets of Hang Ten at 31 March 2002 would have been US$17,853,000 and were represented by its investments in subsidiaries.

27. Operating lease commitments

The total future lease payments under operating leases are payable as follows:

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Within one year 16,614 15,098 15,129 After 1 year but within 5 years 32,538 26,443 23,072 After 5 years 568 Ð Ð

49,720 41,541 38,201

The Hang Ten Group leases a number of properties under operating leases. The leases typically run for an initial period of two to six years, with an option to renew the lease when all terms are renegotiated. The monthly rentals of the leases are either fixed or contingent based on an agreed percentage of the turnover of the respective months. For the purpose of the above disclosure, contingent rentals are based on the minimum rental payments stipulated in the lease agreements.

28. Contingent liabilities

(a) Letters of credit

As at 31 March 2000, 2001 and 2002, outstanding letters of credit of Hang Ten Group for the purchase of goods amounted to US$1,848,000, US$3,116,000 and US$4,409,000 respectively.

(b) Tax contingency

In 1997, ILC, a subsidiary of the Hang Ten Group, entered into a two-year service agreement with the Taiwan branch of another subsidiary, Hang Ten Enterprises Limited (the “Branch”). Pursuant to the agreement, ILC provided decoration design service to retail stores operated by the Branch as well as sales promotion support service to the Branch. The service fees amounted to US$3,200,000 for each of the two years ended 31 March 1998 and 1999. In accordance with the Income Tax Law (the “Law”) of the Republic of China, the service fees are subject to 20% withholding tax. However, the withholding tax rate may be reduced to 3.75% under Article 25 of the Law subject to approval of the Taiwan Tax Authority. As at 31 March 2002, the application filed by ILC with the Tax Authority for a reduction of the withholding tax rate to 3.75% had not yet been approved. If the application is not successful, ILC will be liable to pay an additional withholding tax of approximately US$1,040,000. No provision for this amount has been made as the directors of Hang Ten consider it highly likely that the Taiwan Tax Authority will approve the application, on the basis of the success of similar applications previously made by ILC.

The Hang Ten Group entered into forward exchange contracts for hedging purposes in the ordinary course of business. The contracted notional amounts of the forward exchange contracts outstanding at 31 March 2000, 2001 and 2002 were US$Nil, US$6,790,000 and US$Nil respectively. The maturity of the forward exchange contracts was within 3 months from the date of the contracts.

Ð 152 Ð APPENDIX II ACCOUNTANTS’ REPORT

29. Pledge of assets

During the relevant period, the Hang Ten Group’s banking facilities were secured/guaranteed as follows:

(i) Pledge of 620,681 shares of ILC with effect from December 2001;

(ii) Unconditional personal guarantees executed by shareholders of Hang Ten (BVI), Mr. Dennis Kung and Ms. Wang Li Wen for banking facilities totalling US$10.5 million; and

(iii) Corporate guarantees issued by a shareholder of Hang Ten (BVI), YGM Trading Limited for US$12 million and NT$234 million which were released subsequent to the acquisition of ILC by Hang Ten (BVI).

Subsequent to 31 March 2002, the banking facilities secured by the personal guarantees of Mr. Dennis Kung and Ms. Wang Li Wen in the total amount of US$4.35 million have been terminated by Hang Ten Group. In addition, the Hang Ten Group has obtained an approval-in-principle letter from each of the other two banks in respect of banking facilities in the total amount of US$6.15 million for replacing the personal guarantees given by Mr. Dennis Kung and Ms. Wang Li Wen with corporate guarantees to be given by member(s) of Hang Ten Group upon listing of the shares of Hang Ten on the Stock Exchange.

30. Related party transactions

During the relevant period, the Hang Ten Group had the following material transactions with related parties:

Year ended 31 March 2000 2001 2002 Note US$’000 US$’000 US$’000

Ð Consultancy fees (b)(i) 1,029 1,075 995 Ð Rental income (b)(ii) 296 289 233 Ð Rental expenses (b)(iii) 74 58 133 Ð Purchases of goods (b)(iv) 106 1,001 3,274 Ð Sales of goods (b)(v) 3,617 4,325 2,098 Ð Royalty income (b)(vi) 39 47 75 Ð Guarantees given by shareholders (b)(vii) 30,182 29,627 10,500 Ð Proceeds from disposal of subsidiary (b)(xii) Ð Ð 20

(a) Names of related parties and relationship

Name Relationship

Dennis Kung A shareholder of Hang Ten (BVI).

Wang Li Wen A shareholder of Hang Ten (BVI) and director of Hang Ten.

Kao Yu Chu A shareholder of Hang Ten (BVI) and director of Hang Ten.

Asian Wide Services Limited (“AWSL”) A company owned by Kenneth Hung, Hung Cheng Sui Tsen, Peggy Hung and Pamela Hung

YGM Trading Limited (“YGM”) A shareholder of Hang Ten (BVI).

Michel Rene Enterprises Limited A subsidiary of YGM. (“Michel Rene”)

Global Inc. A minority shareholder of Hang Ten Korea Corp., a subsidiary of Hang Ten.

Chua and company A minority shareholder of Hang Ten Phils., (“Chua & co”) Corp, a subsidiary of Hang Ten.

Avon Dale Garments Inc An associate of Chua & co. (“Avon Dale”)

Hang Ten China (Group) Limited A former indirect subsidiary of Hang Ten (BVI) and now (“Hang Ten China”) an entity 97% owned by the Kung Family, YGM, Wang Li Wen and Kao Yu Chu.

(b) Material transactions with related parties

During the relevant period, details of material transactions with related parties are as follows:

(i) Consultancy fees

During the relevant period, there existed a consultancy agreement between ILC and AWSL. Pursuant to the agreement, AWSL is entitled to 5% of the consolidated profit before tax of ILC as well as a monthly consultancy fee of US$24,000, US$27,000 and US$31,000 during each of the three years

Ð 153 Ð APPENDIX II ACCOUNTANTS’ REPORT

ended 31 March 2000, 2001 and 2002 respectively. The consultancy fees for each of the three years ended 31 March 2000, 2001 and 2002 amounted to a total of US$1,029,000, US$1,075,000 and US$995,000 respectively. As at 31 March 2000, 2001 and 2002, balances due to AWSL amounted to US$744,000, US$748,000 and US$618,000 respectively.

(ii) Rental income

During the relevant period, ILC leased retail stores and equipment to Michel Rene. The total rental income for each of the three years ended 31 March 2000, 2001 and 2002 amounted to US$296,000, US$289,000 and US$233,000 respectively.

(iii) Rental expenses

During the relevant period, ILC leased retail stores from Michel Rene. Total rental expenses for each of the three years ended 31 March 2000, 2001 and 2002 amounted to US$74,000, US$41,000 and US$30,000 respectively.

In addition, Hang Ten Enterprises Limited, a subsidiary of Hang Ten, leased warehouse and office premises from Global Inc.. Total rental expenses for each of the three years ended 31 March 2000, 2001 and 2002 amounted to US$Nil, US$17,000 and US$103,000 respectively.

(iv) Purchases of goods

During the relevant period, Hang Ten Enterprises Limited purchased goods from Michel Rene which amounted to US$106,000, US$147,000 and US$8,000 for each of the three years ended 31 March 2000, 2001 and 2002 respectively.

Another subsidiary of Hang Ten, Hang Ten Korea Corp., also purchased goods from Global Inc. which amounted to US$ Nil, US$854,000 and US$3,266,000 for each of the three years ended 31 March 2000, 2001 and 2002 respectively.

(v) Sales of goods

During the relevant period, Hang Ten Korea Corp. sold goods to Global Inc. which amounted to US$Nil, US$248,000 and US$332,000 for each of the three years ended 31 March 2000, 2001 and 2002 respectively.

In addition, Hang Ten Phils Corp., a subsidiary of Hang Ten, sold goods to Chua & co which amounted to US$3,617,000, US$4,077,000 and US$1,766,000 for each of the three years ended 31 March 2000, 2001 and 2002 respectively.

(vi) Royalty income

During the relevant period, HTIL Corporation, B.V., a subsidiary of Hang Ten, received royalty income from Avon Dale for the use of the brand name “Hang Ten” in the Philippines. Royalty is charged by HTIL Corporation, B.V., in accordance with the related agreement. Total royalty income for each of the three years ended 31 March 2000, 2001 and 2002 amounted to US$39,000, US$47,000 and US$75,000 respectively.

(vii) Guarantees

During the relevant period, Mr. Dennis Kung and Ms. Wang Li Wen have jointly given guarantees to certain banks to secure banking facilities granted to the Hang Ten Group totalling US$10.5 million.

In addition, YGM has given corporate guarantees in the amounts of US$12 million and NT$234 million (equivalent to approximately US$7 million) to a bank to secure banking facilities granted to the Hang Ten Group. The guarantees given by YGM were released by the bank following the acquisition of ILC by Hang Ten (BVI).

Ð 154 Ð APPENDIX II ACCOUNTANTS’ REPORT

(viii) Balance with Michel Rene

As at 31 March 2000, 2001 and 2002, the net balance due from Michel Rene arising from transactions set out in (ii), (iii) and (iv) above amounted to US$14,000, US$Nil and US$2,000 respectively. Details of the terms of the outstanding balances are stated in note 20.

(ix) Balances with Global Inc.

As at 31 March 2000, 2001 and 2002, the balance due to Global Inc. arising from transactions set out in (iii) (iv), and (v) above amounted to US$Nil, US$246,000 and US$26,000 respectively. Details of the terms of outstanding balances are set out in note 20.

Global Inc. also advanced loans to Hang Ten Korea Corp. As at 31 March 2000, 2001 and 2002, the outstanding loan balance amounted to US$Nil, US$331,000 and US$497,000 respectively and was included under other loans in the combined balance sheets. The terms of the loans are set out in note 22.

(x) Balances with Chua & co and Avon Dale

As at 31 March 2000, 2001 and 2002, the net balance due from/(to) Chua & co and Avon Dale arising from transactions set out in (v) and (vi) above amounted to (US$225,000), (US$18,000) and US$4,000 respectively. Details of the terms of outstanding balances are set out in note 20.

(xi) Balance with Hang Ten China

ILC has advanced loans to Hang Ten China. As at 31 March 2000, 2001, 2002, the outstanding loan balance amounted to US$Nil, US$Nil and US$1,650,000, respectively. The terms of the loans are set out in note 20. Subsequent to 31 March 2002, the outstanding loan balance was repaid in full by Hang Ten China.

(xii) Disposal of subsidiary

On 28 March 2002, ILC disposed of the entire issue share capital of Hang Ten China to Accurate Sino Developments Limited for a cash consideration of US$20,000, based on the original cost of investment made by ILC. YGM, Asian Wide, Wang Li Wen and Kao Yu Chu collectively hold an indirect interest of approximately 97% in Accurate Sino Developments Limited.

Items (ii) to (vi) above will be continued after the listing of the shares of Hang Ten on the Stock Exchange, except for rental of warehouse and office premises from Global Inc. and purchases of goods from Michel Rene as included under items (iii) and (iv) respectively which will not be continued.

Item (i) will not be continued after the listing of the shares of Hang Ten on the Stock Exchange.

The directors of Hang Ten are of the opinion that the above related party transactions (i) to (vi) were conducted on normal commercial terms and in the ordinary course of business.

31. Segment reporting

Segment information is presented in respect of the Hang Ten Group’s geographical and business segments. Information related to geographical segments based on the location of customers is chosen as the primary reporting format because this is more relevant to the Hang Ten Group in making operating and financial decisions.

Geographical segments by the location of customers and by the location of assets

The Hang Ten Group’s business is managed on a worldwide basis, but participate in two principal economic environments. Taiwan and Korea are the major markets for the Hang Ten Group’s business.

When presenting information on the basis of geographical segments, segment information is based on the geographical location of customers unless otherwise stated. Segment assets and capital expenditure are not further analysed by the geographical location of the assets, as the Hang Ten Group’s assets are located in the same geographical areas as its customers.

Ð 155 Ð APPENDIX II ACCOUNTANTS’ REPORT

(i) An analysis of the Hang Ten Group’s revenue and results by geographical segments is as follows:

Inter- segment Taiwan Philippines Singapore Korea elimination Unallocated Total US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Year ended 31 March 2000 Revenue from external customers 134,483 4,780 919 Ð Ð 4,937 145,119 Inter-segment revenue 6,619 Ð Ð Ð (6,619) Ð Ð

Total revenue 141,102 4,780 919 Ð (6,619) 4,937 145,119

Segment result 11,191 620 (154) Ð (115) 1,741 13,283 Finance costs (14) Taxation (1,796) Minority interests (540)

Profit attributable to shareholders 10,933

Depreciation and amortisation for the year 2,330 310 62 Ð 71 2,773

Year ended 31 March 2001 Revenue from external customers 131,315 4,196 3,872 2,321 Ð 4,242 145,946 Inter-segment revenue 7,869 Ð Ð Ð (7,918) 49 Ð

Total revenue 139,184 4,196 3,872 2,321 (7,918) 4,291 145,946

Segment result 10,368 244 (169) 177 (77) 2,257 12,800 Finance costs (287) Taxation (1,192) Minority interests (469)

Profit attributable to shareholders 10,852

Depreciation and amortisation for the year 3,428 256 214 28 93 4,019

Ð 156 Ð APPENDIX II ACCOUNTANTS’ REPORT

Inter- segment Taiwan Philippines Singapore Korea elimination Unallocated Total US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Year ended 31 March 2002

Revenue from external customers 112,260 4,582 8,471 30,156 Ð 3,877 159,346 Inter-segment revenue 20,795 Ð Ð Ð (21,428) 633 Ð

Total revenue 133,055 4,582 8,471 30,156 (21,428) 4,510 159,346

Segment result 6,601 321 (293) 2,849 (594) 2,847 11,731 Finance costs (1,025) Taxation (1,126) Minority interests (1,020)

Profit attributable to shareholders 8,560

Depreciation and amortisation for the year 2,969 227 379 337 232 4,144

(ii) An analysis of the Hang Ten Group’s assets and liabilities by geographical segments is as follow:

Inter- segment Taiwan Philippines Singapore Korea elimination Unallocated Total US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

At 31 March 2000 Segment assets 73,811 2,710 1,165 Ð (25,823) 24,395 76,258

Segment liabilities 9,939 3,066 745 Ð (25,657) 26,238 14,331

At 31 March 2001 Segment assets 62,591 2,565 1,679 3,759 (26,598) 23,256 67,252

Segment liabilities 13,999 1,755 1,455 2,043 (26,355) 36,813 29,710

At 31 March 2002 Segment assets 67,608 1,874 2,530 8,478 (30,066) 33,587 84,011

Segment liabilities 15,033 831 2,544 3,894 (29,229) 73,085 66,158

Ð 157 Ð APPENDIX II ACCOUNTANTS’ REPORT

(iii) Segmental capital expenditure

Capital expenditure for the year:

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Taiwan 1,881 2,671 1,886 Korea Ð 203 392 The Philippines 101 147 252 Singapore 467 290 562 Unallocated 14,054 185 75

16,503 3,496 3,167

Business segments

The Hang Ten Group comprises the following main business segments:

* Sales of apparels Ð Retail and wholesale of branded apparels and accessories

* Royalty income – Licensing “Hang Ten” brand to worldwide licensees

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Revenue from customers: Sales of apparels 140,182 141,704 155,469 Royalty income 4,937 4,242 3,877

Total 145,119 145,946 159,346

At 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Segment assets: Sales of apparels 51,863 43,996 50,424 Royalty income 1,884 2,654 3,994 Unallocated (including trademarks) 22,511 20,602 29,593

Total 76,258 67,252 84,011

Year ended 31 March 2000 2001 2002 US$’000 US$’000 US$’000

Segment capital expenditure: Sales of apparels 2,449 3,311 3,092 Royalty income 14,054 185 75

Total 16,503 3,496 3,167

Ð 158 Ð APPENDIX II ACCOUNTANTS’ REPORT

C. DIRECTORS’ REMUNERATION

Save as disclosed in the above, no remuneration has been paid or is payable in respect of the relevant period by Hang Ten or any of its Subsidiaries to the directors of Hang Ten. Under the arrangements currently in force, the estimated aggregate amount of directors’ fees and other emoluments payable to the directors of Hang Ten for the year ending 31 March 2003 will be approximately US$470,000, including any benefits in kind and retirement scheme contributions but excluding management bonuses.

D. SUBSEQUENT EVENTS

The following events took place subsequent to 31 March 2002:

On 27 July 2002, ILC established a wholly owned subsidiary, Hang Ten Enterprises (M) Sdn Bhd which is engaged in the retail and wholesale of apparels in Malaysia.

In October 2002, ILC agreed to subscribe for 440,000 new shares in Hang Ten Korea Corp. for a cash consideration of KRW 4,400 million (equivalent to US$3.6 million). Following the subscription, Hang Ten Group’s effective equity interest in Hang Ten Korea Corp. is increased from 67.9% as at 31 March 2002 to 89.3%.

On 28 October 2002, Hang Ten (BVI) and certain new investors entered into agreements for the subscription of a total of 38,218 new shares of US$0.1 each in Hang Ten (BVI), representing approximately 3.7% of Hang Ten (BVI)’s enlarged issued share capital, for a total consideration of HK$35 million (equivalent to US$4,487,000).

On 28 October 2002, Hang Ten entered into the Sale and Purchase Agreement pursuant to which it will acquire the entire issued share capital of Hang Ten (BVI). To satisfy the consideration for the acquisition, Hang Ten will issue 22,010 million shares of HK$0.001 each (with one warrant for every five shares) and 7,307 convertible preference shares of HK$10,000 each to the existing shareholders and new investors of Hang Ten (BVI). In order to maintain sufficient public float upon the listing of Hang Ten’s shares on the Stock Exchange, the new investors of Hang Ten (BVI) have agreed to convert the 269 convertible preference shares to be allotted to them into 2,690 million ordinary shares of Hang Ten immediately upon the successful implementation of the Proposal and before the commencement of dealing in the shares of Hang Ten on the Stock Exchange. Further details of this acquisition are set out in the paragraph headed “Acquisition of Hang Ten (BVI) by Hang Ten” in the section headed “Summary of the Proposal” of the Document. A summary of the terms of the warrants and convertible preference shares is included in Appendix I to the Document. In addition, pursuant to the restructuring proposal of Akai, details of which are set out in the section headed “Summary of the Proposal” of the Document, it is proposed, inter-alia, that:

Ð The shareholders of Akai will transfer all of their shares in Akai (“Akai Shares”) to Hang Ten in return for 300 million Hang Ten shares of HK$0.001 each credited as fully paid up;

Ð Hang Ten will pay HK$12 million (equivalent to US$1,538,000) to the liquidators of Akai (the “Liquidators”) for the benefit of Akai’s creditors (the “Creditors”) and issue 2,100 million Hang Ten shares of HK$0.001 each credited as fully paid to the Liquidators to be held for the benefit of the Creditors; Ð 159 Ð APPENDIX II ACCOUNTANTS’ REPORT

Ð On the successful implementation of the Proposal, Hang Ten will transfer all of the Akai Shares to the Liquidators to be held on trust for the Creditors for the sum of HK$1; and

Ð Listing of the Akai Shares will be withdrawn and the shares of Hang Ten will be listed on the Stock Exchange by way of introduction.

The conditions precedent to the Proposal are set out in the section headed “Summary of the Proposal” of the Document.

E. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared for Hang Ten or any of its Subsidiaries in respect of any period subsequent to 31 March 2002.

Yours faithfully KPMG Certified Public Accountants

Hong Kong, 31 October 2002

Ð 160 Ð APPENDIX III PRO FORMA FINANCIAL INFORMATION ABOUT HANG TEN GROUP HOLDINGS LIMITED

SHARE CAPITAL

The authorised and issued share capital of Hang Ten as at the Latest Practicable Date were as follows:

Authorised: HK$

10,000,000 shares of HK$0.01 each 100,000

Issued as nil-paid

10,000,000 shares of HK$0.01 each 0

The authorised and issued share capital of Hang Ten upon Closing, but before any conversion or exercise of the CPS or Warrants, will be as follows:

Authorised: HK$

250,000,000,000 Hang Ten Shares 250,000,000 7,307 CPS 73,070,000

Issued and fully paid or credited as fully paid:

24,410,000,000 Hang Ten Shares (Note) 24,410,000 7,307 CPS (Note) 73,070,000

The authorised and issued share capital of Hang Ten upon Closing and assuming full conversion and exercise of the CPS and Warrants, will be as follows:

Authorised: HK$

250,000,000,000 Hang Ten Shares 250,000,000 7,307 CPS 73,070,000

Issued and fully paid or credited as fully paid:

24,410,000,000 Hang Ten Shares upon Closing but before conversion or exercise of the CPS or Warrants (Note) 24,410,000 73,070,000,000 Hang Ten Shares to be issued on full conversion of the CPS (based on a conversion price of HK$0.001 per Hang Ten Share) (Note) 73,070,000 4,402,000,000 Hang Ten Shares to be issued on full exercise of the Warrants (based on an exercise price of HK$0.01 per Hang Ten Share) 4,402,000

101,882,000,000 Hang Ten Shares in issue upon full conversion of the CPS and full exercise of the Warrants 101,882,000

All Hang Ten Shares issued and to be issued under the Proposal and on conversion of the CPS and exercise of the Warrants will rank pari passu in all respects with each other, including in particular, as to dividends, voting rights and return of capital.

Ð 161 Ð APPENDIX III PRO FORMA FINANCIAL INFORMATION ABOUT HANG TEN GROUP HOLDINGS LIMITED

Note: In order to maintain sufficient public float upon the listing of the Hang Ten Shares, the Other Investors have agreed to convert the 269 CPS to be issued to them under the Sale and Purchase Agreement into Hang Ten Shares upon Closing but before the commencement of dealing in Hang Ten Shares. Accordingly, there will be 27,100 million Hang Ten Shares and 7,038 CPS issued and credited as fully paid upon listing of the Hang Ten Shares.

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED COMBINED NET LIABILITIES OF THE HANG TEN GROUP

The following is a statement of the adjusted combined net liabilities of the Hang Ten Group immediately following Closing. It is based on the audited combined net assets of the Hang Ten (BVI) Group as at 31 March 2002 adjusted to exclude intangible assets and to reflect the effect of the Proposal and certain adjustments since 31 March 2002:

US$’000

Audited combined net assets of the Hang Ten Group as at 31 March 2002 ...... 17,853

Less: Goodwill ...... (10,001) Intangible assets ...... (19,209)

Audited combined net liabilities of the Hang Ten Group as at 31 March 2002 ...... (11,357)

Add: Proceed to be derived from the subscription of the equity interest in Hang Ten by the Other Investors ...... 4,487

Unaudited combined net profit of the Hang Ten Group for the five months ended 31 August 2002 ...... 3,561

(3,309)

Less: Cash consideration of HK$12 million payable to the Liquidators (for the benefit of the Creditors) ...... (1,538) Deficit on revaluation of land and buildings attributable to Hang Ten Group ...... (453) Estimated expenses relating to the listing of the Hang Ten Group ...... (2,000)

Unaudited adjusted combined net liabilities of the Hang Ten Group immediately following Closing ...... (7,300)

Unaudited adjusted combined net liability value per Hang Ten Share

(i) based on 27,100 million Hang Ten Shares in issue upon Closing ...... US cent (0.03)

(ii) based on 97,480 million Hang Ten Shares in issue upon Closing with all CPS issued to the Investors converted at HK$0.001 but no Warrants exercised ...... US cent (0.007)

(iii) based on 101,882 million Hang Ten Shares in issue upon Closing with all CPS issued to the Investors converted at HK$0.001 and Warrants exercised at a subscription price of HK$0.01 ...... US cent (0.002)

Ð 162 Ð APPENDIX III PRO FORMA FINANCIAL INFORMATION ABOUT HANG TEN GROUP HOLDINGS LIMITED

INDEBTEDNESS

Borrowings

At the close of business on 31 August 2002, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this document, the Hang Ten Group had outstanding borrowings totalling approximately US$40.0 million. These borrowings comprise unsecured bank overdrafts of US$0.4 million, secured bank loans of approximately US$18.9 million, unsecured bank loans of approximately US$3.8 million, unsecured loans advanced by the Investors of US$16.4 million and unsecured loans advanced by a minority shareholder of a subsidiary of US$0.5 million.

Guarantees and securities

As at 31 August 2002, the Hang Ten Group had banking facilities in respect of loans, overdrafts and import/export facilities totalling approximately US$41.1 million, of which US$18.9 million were secured by pledge of 620,681 shares of ILC, representing 97.01% of the issued share capital of ILC, and US$10.5 million were secured by unconditional personal guarantees executed by shareholders of Hang Ten (BVI), Mr. Dennis Kung and Ms. Wang. On 23 August and 26 September 2002, Hang Ten (BVI) obtained an approval-in-principle letter from two banks in respect of banking facilities totalling approximately US$6.15 million for replacing the personal guarantees given by Mr. Dennis Kung and Ms. Wang with corporate guarantees to be given by member(s) of the Hang Ten Group upon listing. On 16 September 2002, Hang Ten Group terminated banking facilities totalling approximately US$4.35 million granted by another two banks which were supported by the personal guarantees of Mr. Dennis Kung and Ms. Wang and the Directors confirm that the said banking facilities have never been used and there will not be any adverse effect on the Hang Ten Group after such termination. Accordingly, the banking facilities of the Hang Ten Group will not be secured by any unconditional personal guarantees executed by Mr. Dennis Kung and Ms. Wang upon listing of the Hang Ten Shares which will be replaced by corporate guarantees from member(s) of the Hang Ten Group.

As at 31 August 2002, the Hang Ten Group did not have any mortgages or charges.

Contingent liabilities

As at 31 August 2002, the Hang Ten Group had the following material contingent liabilities:

US$ Outstanding letters of credit for the purchase of goods 4,728,000 Tax contingency 1,040,000

5,768,000

Ð 163 Ð APPENDIX III PRO FORMA FINANCIAL INFORMATION ABOUT HANG TEN GROUP HOLDINGS LIMITED

Disclaimer

Save as aforesaid and apart from any intra-group liabilities, at the close of business on 31 August 2002, none of Hang Ten nor any member of the Hang Ten Group had any outstanding mortgages, charges, debentures or other loan capital, bank overdrafts or loans or other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptances (other than normal trade bills) or acceptance credits, guarantees or other material contingent liabilities.

The Directors have confirmed, that, save as disclosed on this page, there has been no material change in the indebtedness and contingent liabilities of the Hang Ten Group since 31 August 2002.

Disclosure under practice Note 19 to the Listing Rules

The Directors have confirmed that as at 31 August 2002, they were not aware of any circumstances which would give rise to a disclosure requirement under Practice Note 19 of the Listing Rules. A waiver application in accordance with the guidelines for issuers with negative or negligible net tangible assets as set forth in the announcements by the Stock Exchange dated 3 May 2001, 24 August 2001 and 9 October 2001 has been submitted to the Stock Exchange. Details of the waiver are set out in the letter from the board of directors of Hang Ten Group Holdings Limited.

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

Net current assets

As at 31 August 2002, being the latest practicable date for the purpose of this statement, the Hang Ten Group had net current assets of approximately US$18.9 million. Current assets of the Hang Ten Group comprised cash and bank balances of approximately US$7.7 million, accounts receivable of approximately US$8.6 million, inventories of approximately US$20.1 million and prepayments, deposits and other receivables of approximately US$9.2 million. Current liabilities of the Hang Ten Group comprised bank borrowings of approximately US$11.8 million, accounts payable and accrued liabilities of approximately US$12.3 million, other payables of approximately US$1.9 million, and tax payable of approximately US$0.7 million.

Borrowings and banking facilities

The Hang Ten Group generally finances its operations with internally generated cashflow and banking facilities provided by its bankers in Hong Kong and Taiwan secured by pledge of ILC shares and personal guarantees given by certain shareholders of Hang Ten (BVI).

As at 31 August 2002, the Hang Ten Group had aggregate banking facilities of approximately US$41.1 million, out of which approximately US$23.1 million, representing approximately 56% of the aggregate banking facilities available to the Hang Ten Group, had been utilised.

Among the bank borrowings of US$23.1 million, approximately US$11.8 million taken out by the Hang Ten Group are repayable within one year.

Ð 164 Ð APPENDIX III PRO FORMA FINANCIAL INFORMATION ABOUT HANG TEN GROUP HOLDINGS LIMITED

The Hang Ten Group’s bank borrowings are made in Korean Won, United States dollars and New Taiwan dollars. All of the bank borrowings are at interest rate of approximately 4% per annum. As at 31 August 2002, the Hang Ten Group did not have outstanding hedging instruments.

For the three years ended 31 March 2002 and for the five months ended 31 August 2002, the Hang Ten Group’s gearing ratios, represented by the interest-bearing borrowings as a percentage of the Hang Ten Group’s total assets, amounted to approximately nil%, 18%, 57% and 49% respectively.

Dividend

For each of the years ended 31 March 2000 and 2001, the Hang Ten (BVI) Group declared dividends in the amounts of approximately US$7,021,000 and US$28,038,000 respectively, representing approximately 64.2% and 258.4% of the profit attributable to shareholders for the respective periods. No dividends was declared and paid for the year ended 31 March 2002. The payment of these dividends was financed by internal resources and bank borrowings of the Hang Ten (BVI) Group.

Potential investors should note that the above dividend payments should not be used as a reference for Hang Ten’s dividend policy.

Payment of any future dividends will be financed from the internal resources of the Hang Ten Group.

Rule 8.06 of the Listing Rules

WORKING CAPITAL

Taking into account the financial resources available to the Hang Ten Group including internally generated funds and the present available banking facilities, the Directors are of the opinion that, after completion of the Proposal, the Hang Ten Group will have sufficient working capital to meet its present requirements.

NO MATERIAL CHANGE

Save for the financial information set out in this appendix, the Directors confirm that since 31 March 2002, there has been no material change in the financial or trading position or prospects of the Hang Ten Group.

Ð 165 Ð APPENDIX IV VALUATION REPORT

The following is the text of a letter with a summary of valuations received from Chesterton Petty Limited, an independent property valuer, prepared for the purpose of inclusion in this document in connection with its valuations as at 31 August 2002 of the properties of the Hang Ten (BVI) Group. The letter and summary of valuations are available for inspection as referred to in the sections headed “Document available for Inspection” in Appendix VII of this document.

International Property Consultants

16th Floor CITIC Tower 1 Tim Mei Avenue Central Hong Kong

31 October 2002

The Directors Hang Ten Group Holdings Limited International Commercial Building 8th Floor, No. 23, Sec. 1 Chang An E. Road Taipei Taiwan

Dear Sirs,

In accordance with your instructions for us to value various interests in properties in Taiwan, the Philippines, Korea, Singapore, the United States of America and Malaysia held by Hang Ten Group Holdings Limited (the “Company”) or its subsidiaries (hereinafter together known as the “Group”), we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the open market values of these property interests as at 31 August 2002.

Our valuation is our opinion of the open market value which we would define as intended to mean “the best price at which the sale of an interest in a property would have been completed unconditionally for cash consideration on the date of valuation assuming:

(a) a willing seller;

Ð 166 Ð APPENDIX IV VALUATION REPORT

(b) that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of price and terms and for the completion of the sale;

(c) that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation; and

(d) that no account is taken of any additional bid by a prospective purchaser with a special interest; and

(e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion”.

Our valuation has been made on the assumption that the owners sell the property interests on the open market without the benefit of any deferred term contracts, leasebacks, joint ventures, management agreements or any similar arrangements which would serve to increase the values of the property interests. In addition, no account has been taken of any option or right of pre-emption concerning or affecting the sale of the property interests and no forced sale situation in any manner is assumed in our valuation.

In valuing the property in Group A, which is held by the Group under freehold for occupation in Taiwan, we have made reference to sales evidence as available on the market assuming vacant possession of the property would be readily available upon completion of a sale.

The interests in the properties in Groups B, C, D, E and F, which are leased by the Group in Taiwan, Singapore, Korea, the United States of America and Malaysia respectively, have no commercial value mainly due to the short term nature of the tenancies, the prohibitions against assignment contained in the tenancy agreements or the lack of substantial profit rent.

The interests in the properties in Groups G, H, I, and J which are leased by the Group and sub- leased to third parties in Taiwan, Korea, the United States of America and the Philippines respectively, have no commercial value mainly due to the short term nature of the tenancies, the prohibitions against assignment contained in the tenancy agreements or the lack of substantial profit rent.

We have been provided with copies of extracts of title documents relating to the property interests. However, we have not inspected the original documents to verify any amendments which may not appear on the copies of the extracts of title documents handed to us. We have relied to a considerable extent on information given by the Group. We have no reason to doubt the truth and accuracy of the information provided to us by the Group. We were also advised that no material facts have been omitted from the information so supplied. We consider we have been provided with sufficient information to reach an informed view.

We have relied to a very considerable extent on information given by you and have accepted advice given to us on such matters as the property interests to be valued, planning approvals or statutory notices, easements, tenure, ownership, lettings, occupancy, site and floor areas, attributable interests and all other relevant matters. Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us and are therefore only approximations. We have not at this stage verified the correctness of such areas so provided. Ð 167 Ð APPENDIX IV VALUATION REPORT

We have inspected the exterior of all the properties valued and, where possible, we have also inspected the interior of the properties. No structural survey has been made but, in the course of our inspection, we did not notice any serious defects. We are not, however, able to report that whether or not the properties are free from rot, infestation or any other structural defects.

No allowance has been made in our valuation for any charge, mortgage or amount owing on any property interests nor for any expense or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that all property interests are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values.

We enclose herewith our valuation certificate and a summary of valuation.

Yours faithfully For and on behalf of Chesterton Petty Limited Charles C K Chan MSc FRICS FHKIS MCIArb RPS(GP) Executive Director

Note: Mr. Charles C K Chan, Chartered Estate Surveyor, MSc FRICS, FHKIS, MCIArb, RPS(GP), has been a qualified valuer with Chesterton Petty Limited since June 1987 and has about 17 years’ experience in the valuation of properties in Hong Kong. Mr. Charles C K Chan also has more than 2 years’ experience in the valuation of properties in Taiwan, the Philippines, Korea, Singapore, the United States of America and Malaysia.

Ð 168 Ð APPENDIX IV VALUATION REPORT

VALUATION CERTIFICATE

Group A Ð Property owned by the Group in Taiwan

Open market value in existing state Property Description and tenure Particulars of occupancy as at 31 August 2002

A1. No. 136, Sec. 5, The property comprises a commercial The property is occupied by NT$10,200,000 Minsheng E. Road, unit on the Ground Floor of an the Group as a store. (approximately Sungshan District, 8-storey condominium building US$297,000) Taipei, completed in 1979. Taiwan 97.01% interest The floor area of the property is attributable to the approximately 56.39 sq m. Group: NT$9,895,020 The property is held freehold. (approximately US$288,120)

Note: The owner of the property is Yangtze Apparel Taiwan Enterprise Limited (長江華業股份有限公司), in which the Group has a 97.01% interest.

Ð 169 Ð APPENDIX IV VALUATION REPORT

SUMMARY OF VALUATION

Group B Ð Properties leased by the Group in Taiwan

Capital value Open market value Interest attributable to Floor Area in existing state as at attributable the Group as at Our Ref Property (sq m) User Particulars of tenancy 31 August 2002 to the Group 31 August 2002

B1 Shop counter on 11th Floor, 46.28 Shop 6 mths from 01.04.02 No commercial value 97.01% No commercial value Shinkong Mitsukoshi (Taipei Station), at 23.5% to 27% No. 66, Section 1, of gross turnover pm Jungshiau West Road, to be renewed for 6 mths Taipei, Taiwan at 24% to 27% of gross turnover pm

B2 Shop counter on 5th Floor, 111.74 Shop 9 mths & 15 days from No commercial value 97.01% No commercial value Shinkong Mitsukoshi (Hsienyi), 15.06.02 at 24% to 27% No. 11, Sungshou Road, Shinyi Chiu, of gross turnover pm Taipei, Taiwan

B3 Shop counter on Basement 1, 81.00 Shop 9 mths & 16 days from No commercial value 97.01% No commercial value Shinkong Mitsukoshi (Hsienyi II), 15.12.01 at 24% to 27% No. 12, Sunggau Road, Shinyi Chiu, of gross turnover pm Taipei, Taiwan to be renewed for 6 mths at 24% to 27% of gross turnover pm

B4 Shop counter on 8th Floor, 32.40 Shop 6 mths from 01.04.02 No commercial value 97.01% No commercial value Shinkong Mitsukoshi (Manjing West), at 22% to 25% No. 12, Nanjing West Road, of gross turnover pm. Taipei, Taiwan The property with an enlarged area of 35.37 sq m will be renewed for 1 yr at 22% to 25% of gross turnover pm

B5 Shop counter on 6th Floor, 33.06 Shop 1 yr from 01.10.01 No commercial value 97.01% No commercial value Shinkong Mitsukoshi (Taoyuan), at 22% to 25% No. 189, Dayou Road, Taoyuan City, of gross turnover pm Taoyuan, Taiwan

B6 Shop counter on 5th Floor, 43.64 Shop 1 yr from 01.10.01 No commercial value 97.01% No commercial value Shinkong Mitsukoshi (Hsinchu), at 22% to 25% No. 190, Section 2, Junghua Road, of gross turnover pm Hsinchu, Taiwan

B7 Shop counter on 12th Floor, 69.43 Shop 1 yr from 01.10.01 No commercial value 97.01% No commercial value Shinkong Mitsukoshi (Taichung), at 25% of gross No. 111, Section 2, Taijunggang Road, turnover pm Shituen Chiu, Taichung, Taiwan to be renewed for 1 yr at 25% of gross turnover pm

B8 Shop counter on 5th Floor, 108.44 Shop 1 yr & 4 mths from No commercial value 97.01% No commercial value Shinkong Mitsukoshi (Tainan), 01.06.02 at 22% to 25% No. 588, Section 1, Shimen Road, of gross turnover pm Jung Chiu, Tainan, Taiwan

B9 Shop counter on Basement 1, 66.12 Shop 1 yr from 01.10.01 No commercial value 97.01% No commercial value Shinkong Mitsukoshi (Kaohsiung), at 22% to 25% No. 213, Sanduo 3rd Road, of gross turnover pm Kaohsiung, Taiwan

Ð 170 Ð APPENDIX IV VALUATION REPORT

B10 Shop counter on 6th Floor, 26.45 Shop 11 mths & 15 days No commercial value 97.01% No commercial value Pacific Sogo (Taipei), from 16.09.01 at 28% No. 45, Section 4, of gross turnover pm Jungshiau East Road, to be renewed for 1 yr Taipei, Taiwan at 28% of gross turnover pm

B11 Shop counter on 4th Floor, 47.94 Shop 1 yr from 16.09.01 No commercial value 97.01% No commercial value Pacific Sogo (Shuanghe), at 23% of gross No. 238, Section 1, turnover pm. 47.61 sq m Jungshan Road, of the property will Yunghe City, be renewed for 1 yr Taipei, Taiwan at 23% of gross turnover pm

B12 Shop counter on 6th Floor, 38.02 Shop 1 yr from 16.09.01 No commercial value 97.01% No commercial value Pacific Sogo (Jungli), at 23% of gross No. 357, Yuanhua Road, turnover pm. 16.53 sq m Jungli City, Taoyuan, Taiwan of the property will be renewed for 1 yr at 23% of gross turnover pm

B13 Shop counter on 8th Floor, 39.67 Shop 1 yr from 16.09.01 No commercial value 97.01% No commercial value Pacific Sogo (Hsinchu), at 23% of gross No. 2, Mintzu Road, turnover pm. The property Hsinchu, Taiwan with an enlarged area of 59.51 sq m will be renewed for 1 yr at 23% of gross turnover pm

B14 Shop counter on 6th Floor, 59.51 Shop 1 yr from 16.3.02 No commercial value 97.01% No commercial value Pacific Sogo (Fengyuan), at 21% of gross No. 2, Fushing Road, turnover pm Fengyuan City, Taichung, Taiwan

B15 Shop counter on 9th Floor, 158.69 Shop 6 mths from 01.04.02 No commercial value 97.01% No commercial value Pacific Sogo (Kuangsan), at 23% of gross No. 299, Section 1, turnover pm Taijunggang Road, Bei Chiu, Taichung, Taiwan

B16 Shop counter on 9th Floor, 28.43 Shop 6 mths & 15 days from No commercial value 97.01% No commercial value Pacific Sogo (Kaohsiung), 01.03.02 at 23% to 28.5% No. 217, Sanduo 3rd Road, of gross turnover pm. The Kaohsiung, Taiwan property with an enlarged area of 46.28 sq m will to be renewed for 5 mths & 15 days at 23% to 28.5% of gross turnover pm

B17 Shop counter on 4th Floor, 44.66 Shop 1 yr from 16.09.01 No commercial value 97.01% No commercial value Pacific Sogo (Pingtung) No. 72, at 22.5% of gross Jungjeng Road, Pingtung City, turnover pm Pingtung, Taiwan to be renewed for 1 yr at 22.5% of gross turnover pm

Ð 171 Ð APPENDIX IV VALUATION REPORT

B18 Shop counter on 3rd Floor, 59.51 Shop 1 yr from 01.04.02 No commercial value 97.01% No commercial value Far Eastern (Bauching) No. 27, at 21.5% of gross Bauching Road, Taipei, turnover pm excl Taiwan of service charges

B19 Shop counter on 3rd Floor, 46.95 Shop 1 yr from 01.04.02 No commercial value 97.01% No commercial value Far Eastern (Taoyuan) No. 60, at 21.5% of gross Jungjeng Road, Taoyuan City, turnover pm excl Taoyuan, Taiwan of service charges

B20 Shop counter on 3rd Floor, 82.65 Shop 1 yr from 01.04.02 No commercial value 97.01% No commercial value Far Eastern (Jungli), No. 120, at 21.5% of gross Section 1, Jungyang West Road, turnover pm excl Jungli City, Taoyuan, Taiwan of service charges

B21 Shop counter on 6th Floor, 57.86 Shop 10 mths from 01.06.02 No commercial value 97.01% No commercial value Far Eastern (Chenkung), at 21.5% of gross No. 210, Chianfeng Road, turnover pm excl Tainan, Taiwan of service charges

B22 Shop counter on 6th Floor, 68.76 Shop 1 yr from 01.04.02 No commercial value 97.01% No commercial value Far Eastern (Kaohsiung), at 21.5% of gross No. 6, Jianguo 3rd Road, turnover pm excl Kaohsiung, Taiwan of service charges

B23 Shop counter on Basement 1, 24.46 Shop 1 yr from 01.09.01 No commercial value 97.01% No commercial value Dayeh Takashimaya, No. 55, at 22.5% of gross Section 2, Jungcheng Road, turnover pm. The property Shrlin Chiu, Taipei, Taiwan with an enlarged area of 49.92 sq m will be renewed for 27 days at 22.5% of gross turnover pm

B24 Shop counter No. 016 on 10th Floor, 158.36 Shop 2 yrs from 23.11.01 No commercial value 97.01% No commercial value Core Pacific City, No. 138, at 21% of gross Section 4, Bade Road, turnover pm excl Taipei, Taiwan of service charges

B25 Shop counter on 5th Floor, 57.19 Shop 1 yr & 4 mths from No commercial value 97.01% No commercial value Taoyuan Tonlin, No. 61, 01.06.01 at 23% Jungjeng Road, of gross turnover pm Taoyuan City, excl of service charges Taoyuan, Taiwan

B26 Shop counter on 7th Floor, 57.86 Shop 1 yr from 01.04.02 No commercial value 97.01% No commercial value Yaoyuan Rebar, No. 19, at 21% of gross Jungjeng Road, Taoyuan City, turnover pm Taoyuan, Taiwan

B27 Shop counter on 9th Floor of Building A, 100.50 Shop 1yr 5 mths & 4 days No commercial value 97.01% No commercial value Chung Yo, No. 161, Section 3, from 28.07.01 at 24% Sanmin Road, Taichung, Taiwan of gross turnover pm

B28 Shop counter on Basement 1, 56.20 Shop 1yr from 01.01.02 at 15% No commercial value 97.01% No commercial value Save & Safe (Da Li Store), No. 710, of gross turnover pm excl Section 2, Kuo Kuang Road, of service charges Dali City, Taichung, Taiwan

Ð 172 Ð APPENDIX IV VALUATION REPORT

B29 Shop counter on 2nd Floor, 120.34 Shop 1yr from 01.01.02 at 15% No commercial value 97.01% No commercial value Save & Safe (Beituen Store), of gross turnover pm excl No. 370, Beituen Road, of service charges Taichung, Taiwan

B30 Shop counter on 6th Floor, 157.04 Shop 1yr from 01.04.02 at 20% No commercial value 97.01% No commercial value Reba Idee (Chueiyang Store), of gross turnover pm No. 726, Chueiyang Road, Chiai, Taiwan

B31 Shop counter No. D-06, 184.14 Shop To be leased for 2 yrs No commercial value 97.01% No commercial value D-07 and D-08 on 2nd Floor, from date of operation The Taiwan Sugar Shopping at 18% of gross turnover Center, Tainan, Taiwan pm excl of service charges

B32 Shop counter on 5th Floor, 33.06 Shop 6 mths from 01.04.02 at 22% No commercial value 97.01% No commercial value Hanshin, No. 266-1, of gross turnover pm excl Chenggung 1st Road, of service charges Kaohsiung, Taiwan

B33 Shop counter on 7th Floor, 76.04 Shop 6 mths from No commercial value 97.01% No commercial value Presidend, No. 218, 01.04.02 at 21% to 23% Heping 1st Road, of gross turnover pm Kaohsiung, Taiwan

B34 Shop cuonter on 7th Floor, 29.75 Shop 6 mths from 01.04.02 No commercial value 97.01% No commercial value Ta Lie Esetan, No. 59, at 21% to 30% of Wufu 3rd Road, Kaohsiung, Taiwan gross turnover pm

B35 Shop counter on Basement 1, 157.04 Shop 1 yr & 4 days from No commercial value 97.01% No commercial value Great World, No. 427, 27.09.01 at 19% of Mintzu 1st Road, gross turnover pm Kaohsiung, Taiwan to be renewed for 1 yr at 19% of gross turnover pm

B36 1st Floor, No. 123 Boai Street, 45.49 Shop 2 yrs from 01.08.02 No commercial value 97.01% No commercial value Shulin City, Taipei, at NT$320,000 pm excl Taiwan of service charges

B37 Portion of Ground Floor, 219.85 Shop 3 years from 01.07.02 No commercial value 97.01% No commercial value Nos. 209 and 211, at NT$600,000 pm excl Wufu 2nd Road, of service charges Kaohsiung, Taiwan

B38 Ground Floor, 125.62 Shop 2 yrs from 04.04.02 No commercial value 97.01% No commercial value No. 580 Sungshan Road, at NT$55,000 pm excl Taipei, Taiwan of service charges

B39 Ground Floor to 2nd Floor, 195.05 Shop 6 yrs from on 16.04.98 No commercial value 97.01% No commercial value No. 120 Guanchian West Road, at NT$315,000 pm from Banchiau City, Taipei, Taiwan 5th yr and 367,500 pm from 6th yr; the rent being excl of service charges

B40 Ground Floor and Basement, 93.89 Shop 4 yrs from 01.04.02 No commercial value 97.01% No commercial value No. 42, Section 4, Chenggung Road, at NT$270,000 pm excl Neihu Chiu, Taipei, Taiwan of service charges

Ð 173 Ð APPENDIX IV VALUATION REPORT

B41 Ground Floor, No. 303 Sungjiang Road, 150.75 Shop 4 yrs from 06.05.01 No commercial value 97.01% No commercial value Taipei, Taiwan at NT$250,000 pm from 1st yr to 2nd yr and NT$275,000 pm from 3rd yr to 4th yr; the rent being excl of service charges

B42 Ground Floor to 2nd Floor, 251.91 Shop 2 yrs from 01.06.01 at No commercial value 97.01% No commercial value No. 3 Chungching Road, Banchiau City, NT$48,000 pm excl Taipei, Taiwan of service charges

B43 The whole of 212.17 Shop 5 yrs from 01.09.01 No commercial value 97.01% No commercial value Nos. 7 and 9, Wenchang Street, at NT$750,000 pm excl Hsinchu, Taiwan of service charges

B44 Ground Floor, 157.03 Shop 6 yrs from 01.06.00 at No commercial value 97.01% No commercial value No.26, Section 3, Jungshan North Road, NT$480,000 pm from 2nd yr, Taipei, Taiwan to be increased by 4% pa from 3rd yr to 5th yr excl of service charges

B45 Left Portion of Ground Floor, 106.78 Shop 3 yrs from 10.06.00 No commercial value 97.01% No commercial value No.76 Sungjiang Road, at NT$74,000 pm from Taipei, Taiwan 3rd yr excl of service charges

B46 Ground Floor and 1st Floor, 132.24 Shop 4 yrs from 21.06.99 at No commercial value 97.01% No commercial value No. 308 Shintai Road, NT$233,333 pm excl Shinjuang City, Tapei, Taiwan of service charges

B47 Western Portion of Ground Floor, 380.85 Office 3 yrs from 24.8.00 No commercial value 97.01% No commercial value No. 1 Section 4, Kuo Chang Building, at NT$633,600 pm Nanjing East Road, from 1st yr to 2nd yr Taipei, Taiwan to be increased by 5% from 3yr; the rent being excl of service charges

B48 Ground Floor to 3rd Floor, 72.73 Shop 4 yrs from 01.10.99 at No commercial value 97.01% No commercial value No. 186, Section 1, Shiyuan Road, NT$280,000 pm excl and the whole of 1st Floor, of service charges No. 5, Lane 115, Sanshuei Street, Wanhua Chiu Taipei, Taiwan

B49 Ground Floor, 42.97 Shop 3 yrs from 21.09.99 at No commercial value 97.01% No commercial value No. 69, Section 3, Beishin Road, NT$160,000 pm Shindian City, Taipei, Taiwan from 3rd yr excl of service charges

B50 Ground Floor and Basement, 140.83 Shop 4 yrs from 12.10.99 at No commercial value 97.01% No commercial value No. 110 Dunghu Road, Neihu Chiu, NT$200,000 pm Taipei, Taiwan from 3rd yr to 4th yr excl of service charges

Ð 174 Ð APPENDIX IV VALUATION REPORT

B51 The whole of No. 14, 208.27 Shop 6 yrs from 05.09.00 at No commercial value 97.01% No commercial value Land and Steel Building Structure, NT$430,000 pm Swei Road, No. 578, Section Fuo Kao, from 2nd yr to 3rd yr and Shinjuang City, Taiwan NT$500,000 pm from 4th yr, to be increased by 6% from 5th yr to 6th yr; the rent being excl of service charges

B52 1st to 3rd Floors, 287.62 Shop 4 yrs from 14.12.00 No commercial value 97.01% No commercial value No. 5, Jengyi North Road, at NT$133,200 pm from Sanchung City, Taipei, Taiwan 2nd yr and NT$148,000 pm from 3rd yr and to be increased by 6% on 4th yr; the rent being excl of service charges

B53 Ground Floor to 3rd Floor, 290.93 Shop 4 yrs from 14.12.00 No commercial value 97.01% No commercial value No. 7, Jengyi North Road, at NT$226,800 pm Sanchung City, Taipei, Taiwan from 2nd yr and NT$254,400 pm from 3rd yr to 4th yr

B54 Ground Floor and Basement, 82.65 Shop 2 yrs from 21.12.00 No commercial value 97.01% No commercial value No. 35, Jungjeng Road, at NT$340,000 pm Taoyuan City, Taoyuan, Taiwan from 2nd yr excl of service charges

B55 Ground Floor and 1st Floor, 159.34 Shop 5 yrs from 16.10.99 No commercial value 97.01% No commercial value No. 92, Section 1, Jungyang West Road, at NT$260,000 pm Jungli City, Taoyuan, Taiwan from 3rd yr to 4th yr and NT$310,000 pm from 5th yr; the rent being excl of service charges

B56 Ground Floor and 1st Floor, 142.52 Shop 2 yrs from 06.12.00 No commercial value 97.01% No commercial value Nos. 35 and 37, Dungchian Street, at NT$145,000 pm Hsinchu, Taiwan from 2nd yr excl of service charges

B57 Basement 1, No. 10, Lane 609, 281.43 Showroom 3 yrs from 16.02.00 No commercial value 97.01% No commercial value Section 5, Chungshin Road, / Warehouse at NT$286,037 pm Sanchung City, from 3rd yr excl Taipei, Taiwan of service charges

B58 Ground Floor and Basement, 75.37 Shop 4 yrs from 15.04.02 No commercial value 97.01% No commercial value No. 89, Section 2, Shipai Road, at NT$190,000 pm excl Taipei, Taiwan of service charges

B59 The whole of No. 81, Boai Road, 276.38 Shop 3 yrs from 21.12.00 No commercial value 97.01% No commercial value Taipei, Taiwan at NT$900,000 pm 2nd yr; the rent to be increased by 3 % from 3rd yr excl of service charges

B60 The whole of 158.68 Shop 3 yrs from 21.02.00 No commercial value 97.01% No commercial value No. 34, Section 4, Luosfu Road, at NT$350,000 pm Taipei, Taiwan excl of service charges

Ð 175 Ð APPENDIX IV VALUATION REPORT

B61 Ground Floor and Basement, 221.5 Shop 2 yrs from 01.05.02 No commercial value 97.01% No commercial value No. 222, Section 2, Shiyi Road, at NT$533,000 pm excl Taipei, Taiwan of service charges

B62 Ground Floor and 1st Floor, 110.08 Shop 3 yrs from on 01.03.01 No commercial value 97.01% No commercial value No. 174, Funghe Road and at NT$380,000 pm from Ground Floor and 1st Floor, 2nd yr to 3rd yr excl No. 243, Julin Road, Yunghe City, of service charges Taipei, Taiwan

B63 Portion of Ground Floor, 231.42 Shop 4 yrs from 07.10.00 No commercial value 97.01% No commercial value Nos. 39-43, Emei Street, at NT$1,425,600 pm Taipei, Taiwan from 2nd yr, NT$1,597,200 pm from 3rd yr and NT$1,756,920 pm from 4th yr

B64 Ground Floor, 42.97 Shop 3 yrs from 16.05.02 No commercial value 97.01% No commercial value No. 222, Rener Road, at NT$180,000 pm Keelung, Taiwan excl of service charges

B65 Ground Floor, 129.36 Shop 3 yrs from 03.04.02 No commercial value 97.01% No commercial value Nos. 83, 85 and 87, Section 2, at NT$110,000 pm excl Jinan Road, Taipei, Taiwan of service charges

B66 Ground Floor and 1st Floor, 78.02 Shop 3 yrs from 15.05.01 No commercial value 97.01% No commercial value No. 106, Section 2, Beishin Road, at NT$150,000 pm Shindian City, Taipei, Taiwan excl of service charges

B67 Ground Floor, No. 62, 66.12 Shop 1 yr from 01.06.02 No commercial value 97.01% No commercial value Section 5, Nanjing East Road, at NT$150,000 pm excl Taipei, Taiwan of service charges

B68 Ground Floor and Basement, 112.4 Shop 5 yrs from 15.06.01 at No commercial value 97.01% No commercial value No. 120, Asian Road, Keelung, NT$360,000 pm to be Taiwan increased by 5% every 2 yrs from 2nd yr to 5th yr excl of service charges

B69 Ground Floor to 2nd Floor, 212.91 Shop 4 yrs from 25.07.01 at No commercial value 97.01% No commercial value No. 77, Tunghua Street, NT$550,000 pm from Taipei, Taiwan 1st yr to 2nd yr and NT$577,500 pm from 3rd yr to 4th yr; the rent being excl of service charges

B70 Ground Floor, No. 164, 105.79 Shop 1 yr from 20.08.02 No commercial value 97.01% No commercial value Rauhe Street, Taipei, at NT$160,000 pm Taiwan excl of service charges

Ð 176 Ð APPENDIX IV VALUATION REPORT

B71 Ground Floor and 1st Floor, 276.67 Shop 2 yrs from 16.08.01 No commercial value 97.01% No commercial value Bu Pu Tou Building, at NT$460,000 pm No. 41, Yingjuan Road, from 1st yr and Danshuei Jen, Taipei, at 470,000 pm Taiwan from 2nd yr to be renewed for further 1 yr at NT$470,000; the rent being excl of service charges

B72 Ground Floor, No. 312, 66.12 Shop 2 yrs from 08.03.01 No commercial value 97.01% No commercial value Jungjeng Road, Taipei, at NT$133,333 pm Taiwan excl of service charges

B73 Ground Floor, No. 130, 95.87 Shop 2 yrs from 01.04.01 No commercial value 97.01% No commercial value Section 3, Minchiuan East Road, at NT$158,760 pm excl Taipei, Taiwan of service charges

B74 Pontion of No. 115 401.34 Shop 1 yr from 16.07.02 No commercial value 97.01% No commercial value Jungjeng Road, at NT$600,000 pm Taipei, Taiwan excl of service charges

B75 Ground Floor to 3rd Floor 290.93 Shop 6 yrs from 12.09.97 No commercial value 97.01% No commercial value inculding balcony, No. 80, at NT$450,000 pm Jungjeng Road, Taoyuan City, from 5th yr excl Taoyuan, Taiwan of service charges

B76 Advertisment signboard, N/A advertisement 5 yrs from 01.01.98 No commercial value 97.01% No commercial value 1-3, 2nd Floor, No. 1, signboard at NT$22,222 pm excl Fushing North Road, of service charges Taipei, Taiwan

B77 Ground Floor and Portion of 110.08 Shop 5 yrs from 12.03.98 No commercial value 97.01% No commercial value 2nd Floor, No. 111, at NT$400,000 pm Jungjeng Roadm Taoyuan City, from 4th yr excl Taoyuan, Taiwan of service charges

B78 Ground Floor, No. 206, Section 4, 119.35 Shop 6 yrs from 01.03.98 No commercial value 97.01% No commercial value Jungshiau East Road, Taipei, at NT$935,870 pm and Taiwan to be renewed for 2 yrs at NT$982,663; the rent being excl of service charges

B79 1st Floor, No. 206-1, 119.32 Shop 6 yrs from 01.04.98 No commercial value 97.01% No commercial value Section 4, Jung Shiau at NT$108,695 pm East Road, Taipei, from 1st yr to 2nd yr and Taiwan to be increased by 5% from 3rd yr excl of service charges

B80 Ground Floor, No. 10-1, 60.00 Shop 2 yrs from 01.06.03 No commercial value 97.01% No commercial value Dadung Road, Shrlin Chiu, at NT$330,000 pm excl Taipei, Taiwan of service charges

B81 Ground Floor, No. 58, Yunung Road, 92.56 Shop 3 yrs from 16.09.01 No commercial value 97.01% No commercial value Banchiau City, Taipei, Taiwan at NT$140,000 pm excl of service charges

Ð 177 Ð APPENDIX IV VALUATION REPORT

B82 Ground Floor and 1st Floor, 318.92 Shop 4 yrs from 20.03.99 No commercial value 97.01% No commercial value No. 134, Shintai Road, at NT$350,000 pm Shinjuang City, Taipei, from 3rd yr excl Taiwan of service charges

B83 Ground Floor and portion of 1st Floor, 90.09 Shop 2 yrs from 01.11.00 No commercial value 97.01% No commercial value No. 15-8, Dadung Road, Shrlin Chiu, at NT$440,000 pm Taipei, Taiwan excl of service charges

B84 Ground Floor, No. 15-13, 66.95 Shop 2 yrs from 01.11.00 No commercial value 97.01% No commercial value Dadung Road, Shrlin Chiu, at NT$440,000 pm Taipei, Taiwan excl of service charges

B85 The whole of No. 148, Section 4, 153.39 Shop 5 yrs from 16.10.98 No commercial value 97.01% No commercial value Luosfu Road, Taipei, Taiwan at NT$400,000 pm from 4th yr and at NT$488, 250 pm from 5th yr; the rent being excl of service charges

B86 Ground Floor, No. 178, 64.46 Shop 5 yrs from 01.03.99 No commercial value 97.01% No commercial value Yumin Road, Tucheng City, at NT$110,000 pm Taipei, Taiwan from 4th yr and at NT$127,339 pm from 5th yr; the rent being excl of service charges

B87 External Walls on 1st Floor, N/A advertisement 4 yrs from 01.05.99 No commercial value 97.01% No commercial value No. 176 Yumin Road, signboard at NT$12,155 pm Tucheng City, Taipei, from 4th yr Taiwan

B88 Ground Floor and 1st Floor, 74.38 Shop 5 yrs from 22.08.99 No commercial value 97.01% No commercial value No. 50, Jungjeng Road, at NT$250,000 pm Hsinchu, Taiwan from 3rd yr and at NT$280,900 pm from 5th yr; the rent being excl of service charges

B89 Ground Floor, No. 132-3, 74.71 Shop 2 yrs from 01.09.01 No commercial value 97.01% No commercial value Guangming Road, Beitou Chiu, at NT$135,000 pm Taipei, Taiwan excl of service charges

B90 Ground Floor, No. 98, Section 3, 69.09 Shop 2 yrs from 16.06.01 No commercial value 97.01% No commercial value Shinglung Road, and No. 155, at NT$162,750 pm the pontion of Section Shiuan, from 2nd yr excl No. 934 of Construction of service charges Wenshan Chiu, Taipei, Taiwan

B91 No. 8, Guangfu Road, Bade City, 214.89 Shop 3 yrs from 08.11.99 No commercial value 97.01% No commercial value Taoyuan, Taiwan at NT$45,000 pm excl of service charges

B92 Ground Floor, No. 237, Section 2, 68.76 Shop 6 yrs from 01.09.00 No commercial value 97.01% No commercial value Jungshan Road, Banchiau City, at NT$180,000 pm 1st Floor, No. 34, Lane 6, Chenggung Road, excl of service charges Jungli City, Taoyuan, Taipei, Taiwan Ð 178 Ð APPENDIX IV VALUATION REPORT

B93 Ground Floor, No. 156 Jungjeng Road, 86.94 Shop 3 yrs from 24.11.00 No commercial value 97.01% No commercial value Jungli City, Taoyuan, Taiwan at NT$240,000 pm excl of service charges

B94 Ground to 2nd Floors, No. 67, 147.11 Shop 4 yrs from 16.04.01 No commercial value 97.01% No commercial value Fushou Street, Shinjuang City, at NT$240,000 pm Taipei, Taiwan excl of service charges

B95 Suites L310 & L310-1, Metro Walk, 113.72 Shop 3 yrs from 01.04.01 at No commercial value 97.01% No commercial value No. 543, Section 2, Jungyuan City, NT$130,720 pm Taoyuan, Taiwan or 15% of gross turnover; to be increased 5% pa excl of service charges

B96 Ground Floor of No. 91 and 58.51 Shop 6 yrs from 01.10.01 No commercial value 97.01% No commercial value rear portion of Basement of at NT$170,000 pm No. 93, Shda Road, Taipei, excl of service charges Taiwan

B97 The whole of No. 42, 42.97 Shop 4 yrs from 16.11.01 No commercial value 97.01% No commercial value Jungjeng Road, Hsinchu, at NT$500,000 pm Taiwan excl of service charges

B98 Ground Floor, Jingwang Market, 278.03 Shop 6 yrs from 01.03.02 No commercial value 97.01% No commercial value No. 10, Lane 188, at NT$400,000 pm Minan West Road, Shinjuang City, from 1st yr to 2nd yr, Taipei, Taiwan at NT$425,000 pm from 3rd yr to 4th yr and at NT$450,000 pm from 5th yr to 6th yr; the rent being excl of service charges

B99 Zone A on 8th Floor, 191.58 Office 3 yrs from 01.10.99 No commercial value 97.01% No commercial value International Commercial Building, at NT$81,133 pm No. 23, Section 1, Changan East Road, excl of service charges Taipei, Taiwan

B100 10th Floor, No.105 Boai Street, 110.75 Warehouse 2 yrs from 01.08.01 No commercial value 97.01% No commercial value Shulin City, Taipei, Taiwan at NT$12,000 pm excl of service charges

B101 Units B to L on 8th Floor, No. 23, 1665.47 Office 3 yrs from 01.10.99 No commercial value 97.01% No commercial value Section 1, Changan East Road, at NT$680,089 pm Taipei, Taiwan excl of service charges

B102 1st Floor of RC Factory and 3,636.83 Warehouse 5 yrs from 08.10.01 No commercial value 97.01% No commercial value the whole of steel building structure, at NT$920,000 pm No. 129, Jungshing North Road, excl of service charges Sanchung City, Taipei, Taiwan

B103 Basement and Ground Floor, 78.02 Shop 3 yrs from 01.05.01 No commercial value 97.01% No commercial value No. 8, Fengjia Road, at NT$264,444 pm Taichung, Taiwan to be increased by 5% pa ; the rent being excl of service charges

Ð 179 Ð APPENDIX IV VALUATION REPORT

B104 Ground Floor and 1st Floor, 217.5 Shop 3 yrs from 21.05.02 No commercial value 97.01% No commercial value No. 33, Jungjeng Road, at NT$360,000 pm Fengyuan City, Taichung, excl of service charges Taiwan

B105 Ground Floor to 2nd Floor, 131.90 Shop/ 3 yrs from 01.10.01 No commercial value 97.01% No commercial value No. 28, Taiping Road, Carpark at NT$115,000 pm Taichung, Taiwan excl of service charges

B106 Ground Floor to 2nd Floor, 183.49 Shop 3 yrs from 01.10.01 No commercial value 97.01% No commercial value No. 28-1, Taiping Road, at NT$115,000 pm Taichung, Taiwan excl of service charges

B107 Basement and Ground Floor, 41.99 Shop 3 yrs from 28.10.99 No commercial value 97.01% No commercial value No. 29, Jungjeng Road, at NT$130,000 pm Taichung, Taiwan excl of service charges

B108 Ground Floor and 1st Floor, 81.33 Shop 1 yr from 08.07.02 No commercial value 97.01% No commercial value No. 7, Jungjeng Road, at NT$200,000 pm Taichung, Taiwan excl of service charges

B109 Two buildings at Nos. 106 and 108, 119.02 Shop 4 yrs from 01.10.99 No commercial value 97.01% No commercial value Minsheng S. Road, Douliou City, at NT$170,000 pm Yunlin, Taiwan to be increased by NT$5,000 pa; the rent being excl of service charges

B110 Basement 1, Ground Floor and 1st Floor, 172.57 Shop 3 yrs from 04.06.01 No commercial value 97.01% No commercial value No. 51-5 Yimin Road, Beigang Jen, at NT$230,000 pm Yunlin, Taiwan from 2nd yr; the rent being excl of service charges

B111 Ground Floor to 4th Floor, 311.43 Shop 5 yrs from 01.08.01 No commercial value 97.01% No commercial value No. 57, Dungning Road, at NT$190,000 pm Tainan, Taiwan excl of service charges

B112 The whole of No. 142, Section 4, 78.35 Shop 4 yrs from 01.09.01 No commercial value 97.01% No commercial value Shimen Road, Tainan, Taiwan at NT$122,222 pm excl of service charges

B113 Nos. 327 and 329, Jungjeag Road, 110.42 Shop 1 yr from 19.12.01 No commercial value 97.01% No commercial value Tainan, Taiwan at NT$170,000 pm excl of service charges

B114 Ground Floor, 1st Floor and 2nd Floor, 267.79 Shop 4 yrs from 01.01.02 No commercial value 97.01% No commercial value No. 384, Jungshan Road, Chiai, Taiwan at NT$265,000 pm excl of service charges

B115 No. 80, Shingjung Road, Madou Jen, 123.98 Shop 3 yrs from 16.01.02 No commercial value 97.01% No commercial value Tainan, Taiwan at NT$61,000 pm excl of service charges

B116 Portion on Ground Floor, 505.82 Shop 3 yrs from 01.07.02 No commercial value 97.01% No commercial value 1st Floor and 2nd Floor at NT$400,000 pm & No. 220-1, Jungjeng Road, NT$420,000 pm Tainan, Taiwan from 3rd yr; the rent being excl of service charges

Ð 180 Ð APPENDIX IV VALUATION REPORT

B117 Shop Counters on Ground Floor and 155.38 Shop 4 yrs from 01.09.01 No commercial value 97.01% No commercial value 1st Floor, Nos. 265, 267, 269 and 271, at 5% of gross turnover Jungjeng Road, Tainan, Taiwan and not less than NT$540,000 pm excl of service charges

B118 Ground Floor, No. 51, Yanping Road, 105.79 Shop 2 yrs from 01.11.01 No commercial value 97.01% No commercial value Shinying City, Tainan, Taiwwan at NT$100,000 pm excl of service charges

B119 1st Floor, No. 64, Section 2, 130.75 Shop 3 yrs from 01.09.01 No commercial value 97.01% No commercial value Mintzu Road, Tainan, at NT$130,000 pm Taiwan excl of service charges

B120 The whole of No. 89, 182.49 Shop 5 yrs from 16.06.00 No commercial value 97.01% No commercial value Tzuoyingda Road, at NT$120,000 pm Kaohsiung, Taiwan from 3rd yr, NT$125,000 pm from 4th yr & NT$130,000 pm from 5th yr; the rent being excl of service charges

B121 The whole of No. 91, 182.49 Shop 5 yrs from 16.06.00 No commercial value 97.01% No commercial value Tzuoyingda Road, at NT$120,000 pm Kaohsiung, Taiwan from 3rd yr, NT$125,000 pm from 4th yr & NT$130,000 pm from 5th yr; the rent being excl of service charges

B122 The whole of No. 11, 128.93 Shop 5 yrs from 01.08.00 No commercial value 97.01% No commercial value Jianguo 3rd Road, at NT$780,000 pm from Kaohsiung, Taiwan 2nd yr; the rent being excl of service charges

B123 The whole of No. 209, 74.39 Shop 3 yrs from 06.08.00 No commercial value 97.01% No commercial value Sanduo 3rd Road, at NT$120,000 pm Kaohsiung, Taiwan excl of service charges

B124 Ground Floor, No. 358, 66.12 Shop 3 yrs from 10.09.00 No commercial value 97.01% No commercial value Wanjung Street, Kaohsiung, at NT$77,777 pm Taiwan excl of service charges

B125 Basement, Ground Floor and 1st Floor, 204.97 Shop 1 yr from 26.10.01 No commercial value 97.01% No commercial value No. 113, Dayung Road, Kaohsiung, at NT$120,000 pm Taiwan excl of service charges

B126 Ground Floor to 2nd Floor, 399.70 Shop 3 yrs from 16.11.99 No commercial value 97.01% No commercial value No. 96, Section 3, Sanmin Road at NT$450,000 pm Taichung, Taiwan excl of service charges

B127 Basement, Ground Floor, 290.93 Shop 2 yrs from 01.07.01 No commercial value 97.01% No commercial value 1st Floor and 2nd Floor, at NT$120,000 pm No. 102, Jiguang Street, excl of service charges Taichung, Taiwan

Ð 181 Ð APPENDIX IV VALUATION REPORT

B128 Basement, Ground Floor and 1st Floor, 331.26 Shop 5 yrs & 11 mths No commercial value 97.01% No commercial value No. 428, Fushing Road, Taichung, from 01.08.01 at Taiwan NT$450,000 pm & NT$475,000 pm from 35th mths; the rent being excl of service charges

B129 No. 9, Datung Road, Douliou City, 72.73 Shop 2 yrs from 26.07.02 No commercial value 97.01% No commercial value Yunlin, Taiwan at NT$90,000 pm excl of service charges

B130 No. 146, Junghua Road, 100.50 Shop 5 yrs from 01.10.01 No commercial value 97.01% No commercial value Changhua City, Changhua, at NT$230,000 pm & Taiwan NT$250,000 pm from 3rd yr; the rent being excl of service charges

B131 Shop Counters on Ground Floor and 221.60 Shop 4 yrs 1 mth & 25 days No commercial value 97.01% No commercial value 1st Floor, No. 111, Section 2, from 16.04.02 at Gungyi Road, Taichung, Taiwan NT$570,000 pm, NT$600,000 pm from 3rd yr & NT$617,000 pm from 4th yr

B132 Shop Counters on 1st Floor, No. 111, 303.79 Shop 4 yrs 1 mth & 25 days No commercial value 97.01% No commercial value Section 2, Gungyi Road, Taichung, from 16.04.02 at Taiwan NT$570,000 pm, NT$600,000 pm from 3rd yr & NT$617,000 pm from 4th yr

B133 The whole of No. 281-1, Section 1, 126.29 Shop 5 yrs from 10.01.00 No commercial value 97.01% No commercial value Taijunggang Road, Taichung, at NT$280,000 pm Taiwan from 3rd yr; the rent being excl of service charges

B134 No. 75-1, Section 2, Jungshan Road, 122.32 Shop 2 yrs from 15.12.00 No commercial value 97.01% No commercial value Tantz Shiang, Taichung, Taiwan at NT$150,000 pm

B135 Two buildings at Nos. 240 and 283.72 Shop 5 yrs from 25.06.02 No commercial value 97.01% No commercial value 242 Section 2, Taiping Road, at NT$80,000 pm & Tsautuen Jen, Nantou, NT$84,000 pm from 4th yr; Taiwan the rent being excl of service charges

B136 No. 324, Guangming Street, 76.92 Shop 3 yrs from 01.08.02 No commercial value 97.01% No commercial value Yuanlin Jen, Changhua, at NT$30,000 pm Taiwan excl of service charges

B137 The whole of No. 689, 95.87 Shop 3 yrs from 10.01.00 No commercial value 97.01% No commercial value Wujia 2nd Road, at NT$95,000 pm Fengshan City, from 3rd yr; Kaohsiung, the rent being excl Taiwan of service charges

Ð 182 Ð APPENDIX IV VALUATION REPORT

B138 The whole of No. 245, 65.79 Shop 3 yrs from 22.06.02 No commercial value 97.01% No commercial value Tzuoyingda Road, at NT$111,111 pm Kaohsiung, Taiwan excl of service charges

B139 Ground Floor, No. 72-1, 155.38 Shop 3 yrs from 02.04.02 No commercial value 97.01% No commercial value Dayung Road, Kaohsiung, at NT$300,000 pm Taiwan excl of service charges

B140 Unit B on Ground Floor, 482.51 Shop 3 yrs from 01.10.00 No commercial value 97.01% No commercial value No. 146, Junghua 3rd Road, at NT$306,495 pm Kaohsiung, Taiwan to be increased by 5% pa; the rent being excl of service charges

B141 Portions of Ground Floor and 185.14 Shop/ 5 yrs from 01.02.98 No commercial value 97.01% No commercial value 1st Floor, Nos. 319, 321 and Residential at NT$325,500 pm 323 Minsheng Road, from the 4th yr; Pingtung City, the rent being excl Pingtung, Taiwan of service charges

B142 Ground Floor, No. 156, 47.61 Shop 3 yrs from 01.06.00 No commercial value 97.01% No commercial value Jungjeng 2nd Road, at NT$270,000 pm Kaohsiung, Taiwan excl of service charges

B143 Shop counter on 3rd Floor, 34.71 Shop 6 mths from 01.03.02 No commercial value 97.01% No commercial value Dayeh Takashimaya, No. 55, at 24.5% to 28.5% Section 2, Jungcheng Road, of gross turnover pm Shrlin Chiu, Taipei, Taiwan excl of service charges

B144 Shop counters 007 and 008 64.14 Shop 2 yrs from 23.11.01 No commercial value 97.01% No commercial value on Basement 2, Core Pacific City, at 21% of gross No. 138, Section 4, Bade Road, turnover pm excl Taipei, Taiwan of service charges

B145 Shop counter on 11th Floor, 26.45 Shop 1 yr & 6 mths from No commercial value 97.01% No commercial value Shinkong Mitsukoshi (Taipei Station), 01.04.01 at 24% to 28% No. 66, Section 1, of gross turnover pm. be Jungshiau West Road, renewed for 6 mths at 24% Taipei, Taiwan to 28% of gross turnover pm excl of service charges

B146 Shop counter on 5th Floor, 52.90 Shop 1 yr & 4 mths from No commercial value 97.01% No commercial value Taoyuan Tonlin, No. 61, 01.06.01 at 24% Jungjeng Road, Taoyuan City, of gross turnover pm Taoyuan, Taiwan excl of service charges

B147 Shop counter on 5th Floor, 33.06 Shop 6 mths from 16.03.02 No commercial value 97.01% No commercial value Jungli Sogo, No. 357, at 21% to 26% of gross Wenhua Road, Jungli City, turnover pm excl Taoyuan, Taiwan of service charges

B148 Shop counter on 7th Floor, 59.18 Shop 1 yr from 16.09.01 at 24% No commercial value 97.01% No commercial value Taichung Sogo, No. 2, of gross turnover pm. Mintzu Road, Hsinchu, The property with an Taiwan enlarged area of 63.61 sqm will be renewed for 1 yr at 24% of gross turnover pm excl of service charges

Ð 183 Ð APPENDIX IV VALUATION REPORT

B149 Shop counter on 9th Floor, 45.62 Shop 6 mths from 01.04.02 No commercial value 97.01% No commercial value Kuangsan Sogo, No. 299, at 25% of gross Section 1, Taijunggang Road, turnover pm excl Taichung, Taiwan of service charges

B150 Shop counter on 7th Floor, 47.61 Shop 6 mths from 01.04.02 No commercial value 97.01% No commercial value Presidenk, No. 218 Heping 1st Road, at 21% to 26% of gross Lingya Chiu, Kaohsiung, Taiwan turnover pm excl of service charges

B151 Shop counter on Basement 1, 24.46 Shop 1 yr from 01.10.01 No commercial value 97.01% No commercial value Shinkong Mitsukoshi, at 24% of gross No. 213 Sanduo 3rd Road, turnover pm excl Lingya Chiu, Kaohsiung, of service charges Taiwan

B152 Shop counter on 1st Floor, Cannes, 47.94 Shop 1 yr from 21.05.02 No commercial value 97.01% No commercial value No. 161 Shchiuan 1st Road, at 20% of gross revenue pm Sanmin Chiu, Kaohsiung, Taiwan

B153 Shop counter on 5th Floor, 33.06 Shop 9 mths & 17 days No commercial value 97.01% No commercial value Shinkong Mitsukoshi (Hsienyi), from 15.06.02 at 27% No. 11, Sungshou Road, of gross sales pm excl Shinyi Chiu, Taipei, of service charges Taiwan

B154 Portion of 2nd Floor, Minsheng II, 92.57 Shop 4 yrs from 01.01.00 No commercial value 97.01% No commercial value No. 122, Section 5, at NT$70,000 pm from Minsheng East Road, 2nd yr and to be Taipei, Taiwan increased by 5% pa from 3rd yr; the rent being excl of service charges

B155 Ground Floor and 1st Floor, 184.87 Shop 4 yrs from 21.03.00 No commercial value 97.01% No commercial value No. 207 Julin Road, Yunghe City, at NT$185,000 pm Taipei, Taiwan from 3rd yr and NT$195,000 pm from 4th yr; the rent being excl of service charges

B156 Ground Floor, No. 92, Section 2, 49.92 Shop 4 yrs from 09.04.00 No commercial value 97.01% No commercial value Wuchang Street, Taipei, Taiwan at NT$300,000 pm from 3rd and 4th yr; the rent being excl of service charges

B157 The Whole of No. 172, Jungjeng Road, 56.86 Shop 3 yrs from 16.05.00 No commercial value 97.01% No commercial value Tainan, Taiwan at NT$145,000 pm from 3rd yr excl of service charges

Ð 184 Ð APPENDIX IV VALUATION REPORT

B158 Portion of Ground Floor 72.07 Shop 6 yrs from 03.09.00 No commercial value 97.01% No commercial value (Shop front to mechanical room), at NT$240,000 pm No. 72 Jungjeng Road, Hsinchu, from 1st and 2nd yr, Taiwan NT$150,000 pm from 3rd yr, NT$252,000 pm from 4th yr and NT$264,600 pm from 5th and 6th yr; the rent being excl of service charges

B159 Basement and Ground Floor, 115.71 Shop 6 yrs & 1 mth No commercial value 97.01% No commercial value No. 27 Dunghu Road, from 01.03.01 at Neihu Chiu, Taipei, NT$180,000 pm Taiwan excl of service charges

B160 Ground Floor, No. 20 Fushing Road, 81.99 Shop 4 yrs from 01.03.01 No commercial value 97.01% No commercial value Fengyuan City, Taichung, Taiwan at NT$190,000 pm excl of service charges

B161 Basement and Ground Floor, No. 54, 81.00 Shop 3 yrs from 08.05.01 No commercial value 97.01% No commercial value Section 4, Chenggung Road, Neihu, at NT$240,00 pm Taipei, Taiwan from 2nd yr and NT$250,000 pm from 3rd yr; the rent being excl of service charges

B162 Shop L306-2 on 3rd Floor, Metro Walk, 85.36 Shop 3 yrs from 01.04.01 No commercial value 97.01% No commercial value No. 543, Section 2, Jungyuan Road, at NT$105,862 pm or Jungli City, Taoyuan, Taiwan 17% of the gross turnover pm and to be increased by 5% pa, whichever is the greater; the rent being excl of service charges

B163 Ground Floor and 1st Floor, No. 281-3, 116.37 Shop 4 yrs from 08.06.01 No commercial value 97.01% No commercial value Section 1, Taijunggang Road, Taichung, at NT$190,000 pm Taiwan from 2nd, 3rd and 4th yr; the rent being excl of service charges

B164 Ground Floor and 1st Floor, 97.53 Shop 4 yrs from 05.06.01 No commercial value 97.01% No commercial value No. 178, Jungjeng Road, at NT$133,333 pm from Shindian City, Taipei, 1st and 2nd yr and Taiwan NT$144,444 pm from 3rd and 4th yr; the rent being excl of service charges

B165 Ground Floor, No. 244, Section 3, 78.35 Shop 3 yrs from 01.04.02 No commercial value 97.01% No commercial value Jungshiau East Road, Taipei, at NT$120,000 pm Taiwan excl of service charges

Ð 185 Ð APPENDIX IV VALUATION REPORT

B166 Ground Floor, No. 19-3, 74.71 Shop 3 yrs & 15 days No commercial value 97.01% No commercial value Tunghua Street, from 01.06.02 Taipei, Taiwan at NT$210,000 pm partly excl of service charges

B167 1st Floor, No. 148 Junghua Road, 149.44 Shop 4 yrs from 21.06.02 No commercial value 97.01% No commercial value Changhua City, Changhua, Taiwan at NT$150,000 pm excl of service charges

Group C Ð Properties leased by the Group in Singapore

C1 Unit #01-14, People’s Park Complex, 37.16 Shop 3 yrs from 15.11.99 No commercial value 97.01% No commercial value 1 Park Road, Singapore 059108 at S$10,000 pm from 3rd yr incl of service charges but excl of GST

C2 Unit #01-28, 3 Simei Street 6, 61.97 Shop 3 yrs from 26.11.99 No commercial value 97.01% No commercial value Eastpoint Mall, Singapore at S$9,671.50 from 528833 3rd yr excl of service charges

C3 Units #03-12/13/14, 3rd Floor, 108.00 Shop 3 yrs from 24.11.99 No commercial value 97.01% No commercial value Wisma Atria, 435 Orchard Road, at S$20,925.18 pm Singapore 238877 from 3rd yr or 18% of gross sales turnover pm, whichever is the greater; the rent being excl of service charges and GST

C4 Unit #02-30 Plaza Singapura, 108.00 Shop 3 yrs from 03.12.99 No commercial value 97.01% No commercial value 68 Orchard Road, at S$17,437.68 pm Singapore 238839 from 3rd yr or 15% of the gross sales pm for a turnover period less basic rent for the same turnover period; the rent being excl of service charges and GST

Ð 186 Ð APPENDIX IV VALUATION REPORT

C5 Units #01-20/23, Lucky Plaza, 61.97 Shop Both 3 yrs from 01.01.00 No commercial value 97.01% No commercial value 304 Orchard Road, respectively at S$16,000 Singapore 288863 pm and at S$17,677.82 pm; the rent for shop 20 being incl of service charges while that of shop 23 being excl and both to be renewed for 3 yrs from 01.01.03 respectively at S$17,600 pm and at S$17,677.82 pm; the rent for shop 20 being incl of service charges but excl of GST while that of shop 23 being excl of service charges and GST

C6 Block 709, 8 Ang Mo Kio Avenue 120.77 Shop/ 3 yrs from 01.12.99 No commercial value 97.01% No commercial value #01-2605, Singapore 560709 Residential at S$21,000 pm incl of service charges but excl of GST

C7 Unit #02-20, Centrepoint, 99.00 Shop 3 yrs from 01.02.00 No commercial value 97.01% No commercial value 176 Orchard Road, Singapore at S$18,000 pm excl of service charges and GST

C8 Units #01-13/14, IMM Building, 121.33 Shop 2 yrs from 01.11.00 No commercial value 97.01% No commercial value 2 Jurong East Street 21, at S$24,552.80 pm Singapore 609601 to be renewed for 2 yrs at S$24,552.80 pm excl of service charges and GST

C9 Block 178 Toa Payoh Central 115.2 Shop 3 yrs from 01.11.00 No commercial value 97.01% No commercial value #01-214, Singapore 310178 at S$17,500 pm incl of service charges but excl of GST

C10 Unit #02-06 and Part of Second Storey, 102.94 Shop 3 yrs from 01.03.01 No commercial value 97.01% No commercial value Block 205, Heartland Mall, at S$14,404 pm 21 Hougang Street, #01-133/135 and excl of service #03-00, Singapore 530205 charges and GST

C11 Units #01-17A/B, Great World City, 75.62 Shop 3 yrs from 18.6.01 No commercial value 97.01% No commercial value 1 Kim Seng Promenade, at S$11,233.2 pm Singapore 237994 excl of service charges and GST

C12 Block 442, 3 Clementi Avenue 134.71 Shop/ 3 yrs from 01.09.01 No commercial value 97.01% No commercial value #01-91, Singapore 120442 Residential at S$26,800 pm excl of service charges and GST

Ð 187 Ð APPENDIX IV VALUATION REPORT

C13 Block 208, New Upper Changi 134.71 Shop/ 3 yrs from 15.09.01 No commercial value 97.01% No commercial value Road #01-687, Singapore 460208 Residential at S$26,800 pm excl of service charges and GST

C14 Units #03-46/47, Thomson Plaza, 111.48 Shop 3 yrs from 12.10.01 No commercial value 97.01% No commercial value 301 Upper Thomson Road, at S$17,760 pm Singapore 574408 excl of service charges and GST

C15 Part of Unit #01-510, Block 190, 92.90 Shop 3 yrs from 29.10.01 No commercial value 97.01% No commercial value Toa Payoh Centre 6, at S$30,000 pm Singapore 310190 incl of service charges but excl of GST

C16 Units #01-01/02, Tampines Mall, 45.99 Shop 3 yrs from 01.12.01 No commercial value 97.01% No commercial value 4 Tampines Central 5, at S$13,368.98 pm + 1% Singapore 529510 of the gross sales pm; the rent being excl of service charges and GST

C17 Units #01-34/35, Turf City, 135.17 Shop 2 yrs 7 mths & 25 days No commercial value 97.01% No commercial value 200 Turf Club Road, from 01.01.02 at Singapore 287994 S$23,832 pm incl of service charges but excl of GST

C18 Unit #B1-03, Lot 1 Shoppers’ Mall, 51.00 Shop 3 yrs from 02.02.02 No commercial value 97.01% No commercial value 21 Chua Chu Kang Avenue 4, at S$11,968.2 pm Singapore 689812 excl of service charges and GST

C19 Unit #02-43, 14 Scotts Road, 150.97 Shop 2 yrs from 18.04.02 No commercial value 97.01% No commercial value Far East Plaza, Singapore 228213 at S$27,625 pm excl of service charges and GST

C20 Units #02-104 to 108, Marina Square, 207.00 Shop 3 yrs from 01.06.02 No commercial value 97.01% No commercial value 6 Raffles Boulevard, Singapore 039594 at S$21,389.31 pm or 12% of the gross sales pm, whichever is the greater; the rent being excl of service charges and GST

C21 Unit #B1-30, CityLink Mall, 73.02 Shop 3 yrs from 01.06.02 No commercial value 97.01% No commercial value 1 Raffles Link, Singapore 039393 at S$10,414.50 pm or 14% of the net turnover pm, whichever is the greater; the rent being excl of service charges

C22 Units #01-09/10, The Majestic, 58.25 Shop 3 yrs from around No commercial value 97.01% No commercial value 80 Eu Tong Sen Street, the end of 2002 at Singapore 059810 S$17,244.40 pm excl of service charges and GST

Ð 188 Ð APPENDIX IV VALUATION REPORT

C23 Units #01-43/44, Compass Point, 105.67 Shop 3 yrs from 01.08.02 No commercial value 97.01% No commercial value 1 Sengkang Square, Singapore 545078 at S$36,160 pm excl of service charges and GST

C24 Unit #01-03/04, Metro Department Store, 46.45 Shop 1 yr 4 mths & 15 days No commercial value 97.01% No commercial value Century Square, 2 Tampines Central 5, from 17.05.02 at S$10,000 Singapore 529509 pm or 25% to 30% of gross sales pm, whichever is the greater

C25 Unit #02-30, Metro Department Store, 46.45 Shop 10 mths & 15 days No commercial value 97.01% No commercial value Causeway Point, 1 Woodland Square, from 17.05.02 at S$9,000 Singapore 738099 pm or 25% to 30% of gross sales pm, whichever is the greater

C26 Unit #02-02, Lam Leong Building, 362.32 Office 3 yrs from 15.10.99 at No commercial value 97.01% No commercial value 61 Lorong 17 Geylang, S$5,066.10 pm Singapore 388574 excl of service charges

C27 Unit #02-02, AIS Industrial Building, 990.99 Office/ 3 yrs from 07.02.02 No commercial value 97.01% No commercial value 103 Kallang Avenue, Singapore 339504 warehouse at S$8,000.25 pm excl of service charges and GST

C28 Unit #06-01A, Lam Leong Building, 92.90 Warehouse/ 1 yr 5 mths & 15 days No commercial value 97.01% No commercial value 61 Lorong 17 Geylang, showroom/ from 01.05.01 at Singapore 388574 office S$1,400 pm incl of service charges but excl of GST

C29 Unit #01-12, Hougang Festival Market, 41.99 Shop 3 yrs from 01.11.02 No commercial value 97.01% No commercial value 1 Hougang Street 91, Singapore 538692 at S$8,136 pm incl of service charges but excl of GST

C30 Units #01-45/46, 1 Maritime Square, 82.97 Shop 3 yrs from the end of No commercial value 97.01% No commercial value World Trade Centre, Singapore 099253 yr 2001 at S$21,434.47 pm incl of service charges but excl of GST

C31 Unit #01-16, 3 Simei Street 6, 81.01 Shop 3 yrs & 17 days from No commercial value 97.01% No commercial value Eastpoint Mall, Singapore 528833 15.12.02 at S$12,644 pm incl of service charges but excl of GST

Ð 189 Ð APPENDIX IV VALUATION REPORT

Group D Ð Properties leased by the Group in Korea

D1 60-15, Kasan-Dong, Kumchon-ku, 2,432.43 Warehouse/ 2 yrs from 12.04.02 No commercial value 67.91% No commercial value Seoul, Korea Office at W27,740,000 pm sharing mgt expense & taxes

D2 60-69, Kasan-Dong, Kumchon-ku, 1,266.20 Warehouse 3 yrs from 01.01 at No commercial value 67.91% No commercial value Seoul, Korea W8,740,000 pm sharing mgt expense & taxes

D3 459-21, Kasan-Dong, Kumchon-ku, 946.65 Warehouse 1 yr from 31.10.01 at No commercial value 67.91% No commercial value Seoul, Korea W6,555,000 pm sharing mgt expense & taxes

D4 256-7, Bujyun-2Dong, Busanjin-ku, 149.94 Warehouse 2 yrs from 25.11.01 at No commercial value 67.91% No commercial value Busan, Korea W1,200,000 pm plus tax on value added separate way burden

Note: As at the Latest Practicable Date, the interest attributable to the Group in the property interests in Korea has been changed to 89.25%.

Group E Ð Property leased by the Group in The United States of America

E1 Suite 250 on 2nd Floor, 527.96 Office 5 yrs and 1 mth from No commercial value 97.01% No commercial value Poway Heights Corporate Plaza, 01.02.01 at US$8,525 pm 13025 Danielson Street, Poway, excl of service charges CA 92064, USA

Ð 190 Ð APPENDIX IV VALUATION REPORT

Group F Ð Properties leased by the Group in Malaysia

F1 No. 5, Jalan PJS, 11/18, 278.71 Office/ 1 yr from 01.08.02 at No commercial value 97.01% No commercial value Bandar Sunway, 46150 Showroom RM2,800 pm excl of Petaling Jaya, Selangor Darul service charges Ehsan, Malaysia

F2 G036, Ground Floor, Sg Wang 57.69 Shop 2 yrs & 2 mths from No commercial value 97.01% No commercial value Plaza 55100, Kuala Lumpar, 01.08.02 at RM16,000 pm, Malaysia RM18,000 pm from 15th mth & RM20,000 pm from 27th mth; the rent being excl of service charges

Group G Ð Properties leased by the Group and sub-leased to third parties in Taiwan

Capital Floor Open market value Interest value attributable Our Area Particulars of Particulars of in existing state attributable to the Group Ref Pr operty (sq m) User Head tenancy Sub-tenancy as at 31 August 2002 to the Group as at 31 August 2002

G1 Ground Floor and 1st Floor, 194.39 Shop 4 yrs from 25.07.99 Portion of the property No commercial value 97.01% No commercial value No. 293, Section 3, at NT$750,000 pm is sub-leased for 3 yrs Luosfu Road, Taipei, Taiwan from 1st yr to 3rd yr from 25.12.99 at and NT$826,875 from NT$300,000 pm excl 4th yr: the rent being of service charges excl of service charges

G2 Ground Floor, No. 55, 75.40 Shop 2 yrs from 15.12.01 3 yrs from 22.06.00 No commercial value 97.01% No commercial value Tianmu West Road, at NT$250,000 pm excl at NT$278,250 pm Taipei, Taiwan of service charges from 2nd yr excl of service charges

G3 Ground Floor, No. 92, 102.48 Shop 6 yrs from 22.04.97 Portion of the property No commercial value 97.01% No commercial value Section 1, Nanjing East Road, at NT$805,000 pm is sub-leased for 6 yrs Taipei, Taiwan from 4th yr from 22.04.97 at NT$271,954 pm from 6th yr excl of service charges. Portion of the property is sub-leased to another third party for 3 yrs from 25.05.00 at NT$220,000 pm and to be increased by 5% from 3rd yr; the rent being excl of service charges

G4 Ground Floor, No. 3, 104.46 Shop 5 yrs from 01.01.98 Portion of the property is No commercial value 97.01% No commercial value Fushing North Road, at NT$900,000 pm sub-leased for 5 yrs from Taipei, Taiwan from 5th yr excl of 01.01.98 at NT$249,673 pm service charges from 5th yr excl of service charges. Portion of the property is sub-leased to another third party for 2 yrs & 2 mths from 01.11 at NT$304,500 pm excl of service charges

Ð 191 Ð APPENDIX IV VALUATION REPORT

G5 1st and 2nd Floors of 101.82 Storage 6 yrs from 01.05.99 Portion of the property is No commercial value 97.01% No commercial value Nos. 98-1 and 98-2 and at NT$650,000 pm sub-leased for 3 yrs from 3rd Floor of No. 98-2, excl of service charges 01.04.02 at NT$350,000 Kuenming Street, pm excl of service charges Taipei, Taiwan

G6 Ground Floor and 1st Floor, 492.85 Shop 3 yrs from 21.05.02 at Portion of the property is No commercial value 97.01% No commercial value No. 34, Jungjeng Road, NT$360,000 pm excl sub-leased for 5 yrs from Fengyuan City, Taichung, Taiwan of service charges 10.05.00 at NT$132,300 pm to be increased by 5% pa from 2nd yr & 4th yr; the rent being excl of service charges

G7 Nos. I6, I7, I17 & I18 in Area I, 215.12 Exhibition/ 3 yrs from 06.10.00 at Portion of the property is No commercial value 97.01% No commercial value Basement 1, No. 10, Lane 609, Warehouse NT$260,091 pm from sub-leased, together with Section 5, Chungshin Road, 2nd yr and to be portions of Nos. I8, I9, I19, I20 Sanchung City, Taipei, Taiwan increased by 5% & I21 in Area I, Basement 1 pa from 3rd yr; within the same building, for the rent being excl of 3 yrs & 5 days from 01.10.00 service charges at a minimum rent of 5% of NT$3,800,000 gross sales pm and to be increased by 5% from 3rd yr excl of service charges

G8 Nos. I8, I9, I19, I20 & I21 239.78 Exhibition/ 3 yrs from 06.10.00 Portion of the property No commercial value 97.01% No commercial value in Area I, Basement 1, No. 10, Warehouse at NT$289,909 pm is sub-leased, together with Lane 609, Section 5, from 2nd yr and to be portions of Nos. I6, I7, I17 & Chungshin Road, Sanchung City, increased by 5% pa I18 in Area I, Basement 1 within Taipei, Taiwan from 3rd yr; the rent the same building, for 3 yrs & being excl of service 5 days from 01.10.00 at a charges minimum rent of 5% of NT$3,800,000 gross sales pm and to be increased by 5% from 3rd yr excl of service charges

G9 Ground Floor and 1st Floor, 485.98 Shop 5 yrs from 01.08.01 4 yrs 6 mths & 15 days from No commercial value 97.01% No commercial value No. 97, Wenhua Road, at NT$150,000 pm 17.01.02 at NT$150,000 pm Chiai, Taiwan from 1st and 2nd yr and excl of service charges NT$157,500 pm from 3rd and 4th yr; the rent being excl of service charges

Group H Ð Properties leased by the Group and sub-leased to third parties in Korea

H1 37-6, Daehyun-Dong, 39.99 Shop 2 yrs from 20.06.01 2 yrs from 20.06.01 at No commercial value 67.91% No commercial value Seodaemoon-ku, Seoul, Korea at W1,500,000 pm W1,500,000 pm sharing sharing mgt expense mgt expense & repair expense & repair expense

H2 55-17, Myung-2ga, Jung-ku, 156.61 Shop 2 yrs from 25.6.01 2 yrs from 25.6.01 No commercial value 67.91% No commercial value Seoul, Korea at W10,000,000 pm at W10,000,000 pm

Ð 192 Ð APPENDIX IV VALUATION REPORT

H3 54-31, Myung-2ga, 59.98 Warehouse 1 yrs from 20.09.01 1 yrs from 20.09.01 No commercial value 67.91% No commercial value Jung-ku, Seoul, at W1,000,000 pm at W1,000,000 pm Korea excl of mgt expense excl of mgt expense

H4 27-19, Daehyun-Dong, 49.59 Warehouse 2 yrs from 25.09.01 2 yrs from 25.09.01 No commercial value 67.91% No commercial value Seodaemoon-ku, at W600,000 excl at W600,000 excl Seoul, Korea of mgt expense of mgt expense

Note: As at the Latest Practicable Date, the interest attributable to the Group in the property interests in Korea has been changed to 89.25%.

Group J - Properties leased by the Group and sub-leased to third parties in the Philippines

J1 Building 11, 598.00 Warehouse 2 yrs from 01.02.02 2 yrs from 01.02.02 No commercial value 53.35% No commercial value 76 Anaconda Compound, at P61,504.30 pm excl at P61,504.30 pm excl F Mariano Ave, De La Paz, of service charges of service charges and VAT Metro Manila, The Philippines and VAT

J2 Building 10, 598.00 Warehouse 2 yrs from 01.02.02 2 yrs from 01.02.02 at No commercial value 53.35% No commercial value 76 Anaconda Compound, at P61,504.30 pm P61,504.30 pm F Mariano Ave, De La Paz, excl of service charges excl of service charges Metro Manila, The Philippines and VAT and VAT

J3 Stall No.225 on 2nd Floor, 44.50 Shop 1 yr from 01.01.02 1 yr from 01.01.02 No commercial value 53.35% No commercial value Alabang Town Center, at P18,912.50 pm at P18,912.50 pm Muntinlupa City, The Philippines + 3% of gross sales + 3% of gross sales excl of service charges excl of service charges

J4 Space 17 on Ground Floor, 46.00 Shop 1 yr from 01.10.01 1 yr from 01.10.01 No commercial value 53.35% No commercial value Ali Mall II, Araneta Center, at a basic rent of at a basic rent of Quezon City, The Philippines P50,025.00 pm + 3% of P50,025.00 pm + 3% of gross sales excl of gross sales excl of service charges service charges

J5 Boutique on Ground Floor, 47.28 Shop 2 yr from 01.06.02 at 2 yr from 01.06.02 No commercial value 53.35% No commercial value L1-13, NE Pacific Mall, a discounted basic rent at a discounted basic The Philippines of 27,138.25 pm + 3% rent of 27,138.25 pm + of gross sales & 3% of gross sales P30,720.18 pm + 3% & 30,720.18 pm + 3% of gross sales of gross sales from from 2nd yr; the 2nd yr; the rent being rent being excl of excl of service service charges and VAT charges and VAT

J6 Units Nos. 16-19 and 26-29, 90.17 Shop 3 yr from 01.10.99 3 yr from 01.10.99 at No commercial value 53.35% No commercial value Ground Floor, at 105,068.79 pm excl 105,068.79 pm excl Ever Gotesco Manila Plaza, of service charges of service charges C.M. Recto Avenue, Manila, The Philippines

J7 Space No. A6 on 2nd Floor, 81.00 Shop 2 yr from 01.07.01 2 yr from 01.07.01 at No commercial value 53.35% No commercial value New Farmers Plaza, The Philippines at a basic rent of a basic rent of P67,735.00 pm + P67,735.00 pm + 3% of 3% of sales & P74,510 pm + sales & P74,510 pm + 3% of Sales from 2nd yr; 3% of Sales from the rent being excl of 2nd yr; the rent being service charges excl of service charges

Ð 193 Ð APPENDIX IV VALUATION REPORT

J8 Space No.1060B on 1st Level, 85.86 Shop 2 yrs from 01.05.02 2 yrs from 01.05.02 at a No commercial value 53.35% No commercial value Festival Supermall, at a basic rent of basic rent of P63,107.10 pm Filinvest Corporate City, Alabang, P63,107.10 pm + 3% of + 3% of gross sales & P69,460.74 Muntinlupa City, The Philippines gross sales & P69,460.74 pm + 3% of gross sales from pm + 3% of gross sales 2nd yr; the rent being from 2nd yrs; the rent being excl of service charges excl of service charges

J9 Upper Ground Level, 100.04 Shop 3 yrs from 20.01.01 3 yrs from 20.01.01 at a No commercial value 53.35% No commercial value Gaisano Mall of Davao, at a basic rent of basic rent of P61,649.50 JP Laurel Ave, Bajada Poblacion, P61,649.50 pm from pm from 2nd yr & P67,814.45 Davao City, The Philippines 2nd yr & P67,814.45 pm from 3rd yr; the rent pm from 3rd yr; the rent being excl of service charges being excl of service and VAT charges and VAT

J10 Units L2-0010 on 2nd Floor, 55.20 Shop 1 yr from 01.11.01 at 1 yr from 01.11.01 at a No commercial value 53.35% No commercial value Isetann Cinerama, a discounted basic rent discounted basic rent of C.M. Recto Manila City, of P36,136.13 pm or P36,136.13 pm or 3% of The Philippines 3% of gross sales, gross sales, whichever is whichever is higher + higher + 3% of gross sales, 3% of gross sales, the the rent being excl of rent being excl of service charges and VAT service charges and VAT

J11 L1-12 on Ground Level, 68.89 Shop 2 yrs from 01.07.01 at 2 yrs from 01.07.01 at a No commercial value 53.35% No commercial value Legazpi Pacific Mall, a discounted basic rent discounted basic rent of Landco Business Park along of P31,000.50 pm + 3% P31,000.50 pm + 3% of Imperial Street, Legazpi, of gross sales & gross sales & P34,100.55 pm Albay, The Philippines P34,100.55 pm + 3% of + 3% of gross sales from 2nd gross sales from 2nd yr; the rent being excl of yr; the rent being excl service charges and VAT of service charges and VAT

J12 Stall No.19, Ground Floor, 33.01 Shop 1 yr from 01.03.02 at 1 yr from 01.03.02 at a No commercial value 53.35% No commercial value Makati Supermarket Building, a discounted basic rent discounted basic rent of Ayala Center, The Philippines of P32,479.20 pm + 3% P32,479.20 pm + 3% of of gross sales ; the rent gross sales ; the rent being excl of service being excl of service charges and VAT charges and VAT

J13 16 & 17 Level 2, 129.40 Shop 2 yrs from 01.08.01 at 2 yrs from 01.08.01 at a No commercial value 53.35% No commercial value Robinsons Place Ermita, a discounted basic rent discounted basic rent of Adriatico St, Ermits Mnnils, of P111,284.00 pm + P111,284.00 pm + 3% of The Philippines 3% of actual sales and actual sales and P125,518.00 P125,518.00 pm + 3% pm + 3% of actual sales from of actual sales from 2nd yr; the rent being excl 2nd yr; the rent being of service charges and VAT excl of service charges and VAT

Ð 194 Ð APPENDIX IV VALUATION REPORT

J14 Level 2 (L2-121), 59.40 Shop 2 yrs from 01.09.01 at 2 yrs from 01.09.01 at a No commercial value 53.35% No commercial value Robinsons Place Iloilo, a discounted basic rent discounted basic rent of The Philippines of P25,245.00 pm + 3% P25,245.00 pm + 3% of of gross sales and gross sales and P29,106.00 P29,106.00 pm + 3% pm + 3% of gross sales of gross sales from 2nd from 2nd yr; the rent being yr; the rent being excl excl of service charges of service charges and VAT and VAT

J15 Level 2, 93.59 Shop 2 yrs from 01.09.01 at 2 yrs from 01.09.01 at No commercial value 53.35% No commercial value Robinsons Place Ð Novaliches, a discounted basic rent a discounted basic rent The Philippines of P28,077.00 pm + 3% of P28,077.00 pm + 3% of of gross sales and gross sales and P30,884.70 P30,884.70 pm + 3% pm + 3% of gross sales from of gross sales from 2nd 2nd yr; the rent being excl yr; the rent being excl of service charges and VAT of service charges and VAT

J16 Robinsons Starmills, 200.10 Shop 2 yrs from 16.02.02 at 2 yrs from 16.02.02 at No commercial value 53.35% No commercial value Pampangs, The Philippines a discounted basic rent a discounted basic rent of of P80,040.00 pm + 3% P80,040.00 pm + 3% of of gross sales and gross sales and P92,046.00 pm P92,046.00 pm + 3% of + 3% of gross sales from gross sales from 2nd yr; 2nd yr; the rent being excl the rent being excl of of service charges and VAT service charges and VAT

J17 Level 3 - 114 , 87.26 Shop 2 yrs from 01.11.01 2 yrs from 01.11.01 at a No commercial value 53.35% No commercial value 116 Robinsons Place, at a discounted basic discounted basic rent of Pasig, Marcos Highway, rent of P57,591.00 pm P57,591.00 pm + 3% of Pasig City, The Philippines + 3% of gross sales and gross sales and P63,350.10 P63,350.10 pm + 3% of pm + 3% of gross sales from gross sales from 2nd yr; 2nd yr; the rent being excl the rent being excl of of service charges and VAT service charges and VAT

J18 AX127, 76.12 Shop 2 yrs from 01.05.01 2 yrs from 01.05.01 No commercial value 53.35% No commercial value SM City North Edsa, at a basic rent at a basic rent The Philippines of P70,411.00 of P70,411.00 pm + 3% pm + 3% of gross sales of gross sales and P74,217 pm and P74,217.00 pm + 3% of + 3% of gross sales from gross sales from 2nd yr; the rent 2nd yr; the rent being excl being excl of service charges of service charges and VAT and VAT

J19 B149, SM City Cebu, 100.32 Shop 2 yrs from 01.02.01 2 yrs from 01.02.01 at No commercial value 53.35% No commercial value The Philippines at a basic rent of a basic rent of P67,716.00 P67,716.00 pm + 3% pm + 3% of gross sales and of gross sales and P70,224.00 pm + 3% of P70,224.00 pm + 3% gross sales from 2nd yr; of gross sales from the rent being excl of 2nd yr; the rent being service charges and VAT excl of service charges and VAT

Ð 195 Ð APPENDIX IV VALUATION REPORT

J20 SMCP 208 a & b, 79.51 Shop 2 yrs from 01.05.01 at 2 yrs from 01.05.01 at No commercial value 53.35% No commercial value SM Centerpoint, a basic rent of a basic rent of P57,644.75 The Philippines P57,644.75 pm + 3% pm + 3% of gross sales and of gross sales and P59,632.50 pm + 3% of P59,632.50 pm + 3% gross sales from 2nd yr; of gross sales from the rent being excl of 2nd yr; the rent being service charges excl of service charges

J21 SMCF 138, 76.46 Shop 2 yrs from 01.11.01 2 yrs from 01.11.01 at No commercial value 53.35% No commercial value SM City Fairview, at a basic rent of a basic rent of P49,699.00 The Philippines P49,699.00 pm + 3% pm + 3% of gross sales and of gross sales and P51,610.50 pm + 3% of gross P51,610.50 pm + 3% of sales from 2nd yr; the rent gross sales from 2nd yr; being excl of service charges the rent being excl of and VAT service charges and VAT

J22 141, SM City Davao, 54.32 Shop 2 yrs 2 months and 15 2 yrs 2 months and 15 days No commercial value 53.35% No commercial value The Philippines days from 01.11.01 at a from 01.11.01 at a basic rent basic rent of P32,592.00 of P32,592.00 pm + 3% of pm + 3% of gross sales gross sales and P35,851.20 pm and P35,851.20 pm + 3% + 3% of gross sales from 2nd of gross sales from 2nd yr; the rent being excl of yr; the rent being excl service charges & VAT of service charges & VAT

J23 1033, SM City Iloilo, 78.586 Shop 2 yrs from 01.08.01 at 2 yrs from 01.08.01 at a No commercial value 53.35% No commercial value The Philippines a basic rent of basic rent of P49,116.25 P49,116.25 pm + 3% pm + 3% of gross sales and of gross sales and P51,080.90 pm + 3% of gross P51,080.90 pm + 3% sales from 2nd yr; the rent of gross sales from being excl of service charges 2nd yr; the rent being excl of service charges

J24 SMCM 330, 96.88 Shop 2 yrs from 01.08.01 2 yrs from 01.08.01 at a basic No commercial value 53.35% No commercial value SM City Manila, The Philippines at a basic rent of rent of P53,284.00 pm + 3% P53,284.00 pm + 3% of gross sales and P58,612.40 of gross sales and pm + 3% of gross sales from P58,612.40 pm + 3% 2nd yr; the rent being excl of gross sales from of service charges 2nd yr; the rent being excl of service charges

J25 SMMG 157a, 74.86 Shop 2 yrs from 01.02.02 2 yrs from 01.02.02 at a No commercial value 53.35% No commercial value SM Megamall, The Philippines at a basic rent of basic rent of P71,117.00 pm P71,117.00 pm + 3% + 3% of gross sales; the of gross sales; the rent rent being excl of being excl of service service charges and VAT charges and VAT

J26 SMC-PP 130, 54.49 Shop 1 yr 11 months and 1 yr 11 months and 21 days No commercial value 53.35% No commercial value SM City Pampanga, 21 days from 10.11.00 from 10.11.00 at a basic rent The Philippines at a basic rent of of P32,966.45 pm + 3% of P32,966.45 pm + 3% of gross sales from 2nd yr; gross sales from 2nd yr; the rent being excl the rent being excl of of service charges service charges

Ð 196 Ð APPENDIX IV VALUATION REPORT

J27 SMS 1229, 62.72 Shop 2 yrs from 01.11.01 2 yrs from 01.11.01 at No commercial value 53.35% No commercial value SM Southmall, The Philippines at a basic rent of a basic rent of P40,768.00 P40,768.00 pm + 3% of pm + 3% of gross sales and gross sales and P42,336.00 pm + 3% of P42,336.00 pm + 3% of gross sales from 2nd yr; gross sales from 2nd yr; the rent being excl of the rent being excl of service charges service charges

J28 L2-28 2nd Sta, 74.25 Shop 1 yr from 01.01.02 1 yr from 01.01.02 at No commercial value 53.35% No commercial value Lucia East Grand Mall, at a basic rent of a basic rent of P53,905.50 The Philippines P53,905.50 pm + 3% pm + 3% of gross sales; of gross sales; the rent the rent being excl of being excl of service service charges and VAT charges and VAT

J29 Stall Nos. B18, B19 and B20 68.38 Shop 3 yrs from 01.07.00 3 yrs from 01.07.00 at No commercial value 53.35% No commercial value on Ground Floor, at P30,771.00 pm to P30,771.00 pm to be increased Gaisano Fiesta Mall, Tabunok, be increased by 10% pa; by 10% pa; the rent being excl The Philippines the rent being excl of of service charges and VAT service charges and VAT

J30 B-140, LowerMall, 129.29 Shop 2 yrs from 14.04.01 2 yrs from 14.04.01 at a No commercial value 53.35% No commercial value Tutuban Centre, The Philippines at a discounted basic discounted basic rent of rent of P119,630.74 pm P119,630.74 pm + 3% + 3% of gross sales from of gross sales from 2nd yr; 2nd yr; the rent being the rent being excl of excl of service charges service charges

Ð 197 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

Akai was formerly known as Semi-Tech (Global) Company Limited, changing its name to Akai Holdings Limited on 5 August 1999.

1. SHARE CAPITAL

The authorised and issued share capital of Akai as at 31 January 1999 was as follows:

Authorised US$

30,000,000,000 Akai Shares 384,600,000

Issued and fully paid-up

1,932,302,000 Akai Shares 24,700,000

All the existing issued Akai Shares rank pari passu in all respects with each other, including in particular, as to dividends, voting rights and return of capital.

The number of issued and fully paid shares as at 31 January 1999 as set out in note 21 to the last audited financial year of Akai was 1,932,302,000 with issued share capital of US$24.7 million (equivalent of HK$192,660,000). The number of issued Akai Shares as per the shareholders list as at 30 November 2000, were 2,191,302,089. For the reason set out in the paragraph headed “Material changes” of this appendix, the Liquidators have no information regarding the respective entries between 1 February, 1999 to the Latest Practicable Date.

Save for certain outstanding options to subscribe for 43.6 million Akai Shares, as disclosed in note 21 to the financial statements of Akai as set out in Appendix V of this document, the Liquidators are not aware of any options, warrants and conversion rights affecting Akai Shares.

Ð 198 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

2. FINANCIAL SUMMARY

The table set out below summarises the consolidated results of the Akai Group derived from its audited consolidated financial statements for the preceding three financial years ended 31 January 1999.

US$m US$m US$m 1999 1998 1997

TURNOVER $ 832.7 $ 1,441.5 $ 1,448.3

PROFIT / (LOSS) BEFORE (70.1) 56.2 64.7 SHARE OF RESULTS OF ASSOCIATED COMPANIES

Share of results of associated companies Operating profits less losses (4.8) 14.6 4.0 Exceptional items (21.6) Ð Ð

PROFIT / (LOSS) BEFORE TAXATION (96.5) 70.8 68.7

Taxation (1.2) (13.0) (6.7)

PROFIT / (LOSS) BEFORE MINORITY INTERESTS (97.7) 57.8 62.0

Minority interests 25.9 (21.0) (17.2)

NET PROFIT / (LOSS) ATTRIBUTABLE TO SHAREHOLDERS (71.8) 36.8 44.8

Earnings / (Loss) per share Basic $ (0.04) $ 0.02 $ 0.03

Dividend per share Interim dividend Nil $ 0.02 $ 0.03 Proposed final dividend Nil Nil $ 0.05 Special dividend Nil Nil $ 0.03

Notes:

1. no dividend was declared in the year ended 31 January 1999.

2. for further details on dividend, please refer to page 204 of the document.

Ð 199 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

The latest audited financial statements of the Akai Group were for the 12 month period from 1 February 1998 to 31 January 1999 and contained in the 1999 annual report of Akai. Unaudited results statements for the 12 month period from 1 February 1999 to 31 January 2000 were announced on 13 July 2000. Details of the unaudited results for the 12 months period from 1 February 1999 to 31 January 2000 were reproduced as follows:

Unaudited results for the 12 month period from 1 February 1999 to 31 January 2000

(Unaudited) (Audited) 12-month 12 month Period Period from 1/2/1999 from 1/2/1998 to 31/1/2000 to 31/1/1999 (US$’ million) (US$’ million)

Turnover Ð Continuing : 285.1 832.7 Ð Discontinued : Ð Ð Operating Profit/(Loss) Ð Continuing : (1,820.0) (70.1) Ð Discontinued : Ð Ð Total Operating Profit/(Loss) : (1,820.0) (70.1) Share of Profit/(Loss) of Associated Companies : (44.8) (26.4) Share of Profit/(Loss) of Jointly Controlled Entities : Ð Ð Profit/(Loss) after Tax & MI : (1,728.7) (71.8) % Change over Last Period : N/A EPS/(LPS) Ð Basic : (US$0.83) (US$0.04) Ð Diluted : N/A N/A Extraordinary (ETD) Gain/(Loss) : Ð Ð Profit/(Loss) after ETD Items : (1,728.7) (71.8) 2nd Interim Dividend per Share : Nil Nil (FIN DIV) (Specify if with other options) : N/A N/A B/C Dates for 2nd Interim Dividend : N/A Payable Date : N/A B/C Dates for (Ð) General Meeting : N/A Other Distribution for Current Period : N/A B/C Dates for Other Distribution : N/A

Ð 200 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

Notes to the unaudited results for the 12 month period from 1 February 1999 to 31 January 2000:

(1) Exceptional items

12 months period year ended ended 31-Jan-00 31-Jan-99 US$’ million US$’ million

Reorganisation and relocation expenses Ð 9.2 Provision for receivable from an associated company Ð 25.6 Gain on disposal of unlisted investments Ð (3.2) Impairment in values of properties 16.0 Ð Write down of the values of brand names 361.1 Ð Provision for non core investments 91.4 26.2 Write off of deferred products development costs and preliminary expenses 25.0 Ð Write off of unamortised goodwill arising on consolidation 153.1 Ð Provision for corporate guarantee in favour of associated companies 293.7 Ð Provision for corporate guarantee in favour of subsidiaries under liquidation or in receivership or disposed subsidiaries 56.3 5.5 Provision for litigation and claims 436.9 Ð Loss on disposal of Toyo 19.8 Ð Provision for doubtful debts 324.4 15.6 Provision for obsolete stocks 27.7 Ð Gain on deemed disposal of a subsidiary (165.3) Ð

1,640.1 78.9

(2) Change in financial year end date

The financial year end date of the Company has been changed form 31 January to 31 March commencing in the financial year 2000.

Ð 201 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

3. MATERIAL CHANGE

The Liquidators are unable to prepare a statement showing all the material changes in the financial position of Akai subsequent to its last published audited accounts for the year ended 31 January 1999 for the following reasons:

1. The Petition for the winding-up of Akai in Hong Kong filed on 13 January 2000 was vigorously contested by Toyo Holdings Limited (“Toyo”) and The Grande Group Ltd. (“Grande”) which resulted in an eight month delay from filing of the Petition to the commencement of the winding-up of Akai. On 28 August 2000, a Petition to wind-up Akai in Bermuda was filed and a winding-up Order was made in Bermuda on 29 September 2000.

2. A Management Agreement was signed on 12 November 1999 which transferred all authority to manage the businesses and assets of Akai to Grande. Grande and the former directors of Akai have not co-operated with the Liquidators in their investigations of Akai.

3. The Akai Group was large and complex. The last audited accounts recorded a turnover of approximately US$830 million and total assets of over US$2,300 million. However, on their appointment, the Liquidators discovered that Akai had no offices, no employees, no business or readily realisable assets and very limited books and records.

4. Limited information has been made available to the Liquidators which is insufficient to establish the current assets of Akai or their movements since its last published and audited accounts for the year ended 31 January 1999.

Much effort has been devoted to recovering a sufficient number of Akai’s books and records. Although Grande delivered 54 boxes of books and records to the Liquidators on 1 September 2000 upon their appointment as joint and several Liquidators of Akai in Bermuda, these boxes contained little relevant accounting or transactional records. The Liquidators found such a small number of boxes unusual and insufficient for an operation with reported turnover of over US$830 million and declared total assets of over US$2,300 million in its last audited accounts.

Following an interview with Mr. Kin Yuen Samuel of Grande, who was seconded to Akai following the establishment of the Management Agreement dated 12 November 1999, in June 2001 and August 2001, Grande delivered a further 513 boxes were delivered to the Liquidators. Mr. Yuen has not provided any further information since despite many requests.

In March 2002, an additional 3,600 boxes of Akai’s books and records were located in a warehouse in PRC, which had been sent there in late 1999 or early 2000. However, these are unhelpful as the majority consist of shipping documents from the late 1980’s, sale and purchase orders from 1990, import declaration reports and export declarations. In summary, they are of little benefit to the Liquidators of Akai.

In August 2002, the Liquidators discovered that a further 80 boxes which were in possession of Grande were in Singapore. However, the Liquidators have not been able to retrieve these

Ð 202 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

boxes, and Grande, again, will not cooperate. Interestingly, the 80 boxes were shipped from Akai’s offices to Singapore within 18 days of the appointment of the Liquidators.

As a result of the above, in order to identify of the assets of Akai and, in particular, since 31 January 1999, the Liquidators have been forced to reconstruct the books and records of Akai, including receipts and payments, trial balances, general ledgers and statutory records. However, in light of the volume and complexity of the transactions and the limited books, records and assistance available to the Liquidators, the reconstruction work to date is only at a preliminary stage and has produced no results that can be relied upon with any degree of certainty.

5. The Statement of Affairs (“SOA”) prepared by Mr. James Ting as at 23 August 2000 is very general in places vague, and, in view of the Liquidators’ investigations being incomplete, unreliable. The SOA is set out in Appendix V of the document.

A brief summary of events of Akai since its last audited accounts (as at 31 January 1999) is as follows:

1. All authority to manage the business of Akai was transferred to Grande pursuant to the Management Agreement signed on 12 November 1999.

2. The Hong Kong Court ordered that Akai be wound-up on 23 August 2000. The Liquidators were appointed by the Hong Kong Court on 24 May 2001.

3. The Bermuda Court ordered that Akai be wound-up on 29 September 2000. The Liquidators were appointed by the Bermuda Court on 16 March 2001.

In conclusion, as Grande and former directors of Akai have not been co-operative and limited resources have and continue to be available to the Liquidators, the investigations into the collapse of Akai Group have been severely restricted. There are significant parts of Akai’s history for which no reliable information can be obtained. Until the investigations are completed, the Liquidators do not have sufficient information to identify or describe the material changes required by the Code in relation to the financial position or trading prospect of Akai since the last published audited accounts. And, in light of the reasons set out above, it is unlikely that these investigations will be completed within the next 8 to 12 months. Accordingly, any report prepared in relation to Akai’s material changes (if it is indeed even possible to prepare one) would be incomplete, meaningless and potentially misleading.

The Liquidators appreciate that under normal circumstances, Akai shareholders should be given information as to the state of affairs since its last audited accounts to enable them to reach informed decisions on the Proposal. However, Akai is in the third stage of the de-listing procedure and Akai shares will be delisted if the Proposal is not successfully implemented on or before 22 January 2003. No other rescue proposal will be able to assist Akai in relation to the missing information. The Liquidators believe it is highly unlikely that Akai Shareholders will receive a distribution in Akai’s winding-up without the successful conclusion of the Proposal. As such, the Liquidators are of the view that the required statement of material changes is irrelevant and will not assist the Akai Shareholders in reaching any informed decision on the Proposal.

Ð 203 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

4. INDEBTEDNESS

As at 26 September 2002, the Liquidators had received proofs of debt containing claims of HK$8,975,675,776 in Bermuda and HK$9,855,359,252 in Hong Kong. The Liquidators have accepted Claims of HK$2,688,723,553 in Bermuda and HK$2,604,552,129 in Hong Kong. However, the Liquidators have not yet completed their adjudication of the claims received.

5. MATERIAL LITIGATION

On 10 November 2000, Akai issued proceedings against two of its subsidiaries, Ferendo Limited and Coliyield Company Limited, to recover proceeds in the amount of HK$7,112,406.21 of sales of 3 residential properties in Hong Kong held by them on trust for Akai. On 1 March 2001, Tremendous Springs Limited was joined in these proceedings as a second defendant and has made claims in relation to the proceeds of these properties. As at the Latest Practicable Date, the proceedings had came to a standstill due to the lack of funds of Akai to progress the proceedings .

6. MATERIAL CONTRACTS

No material contract has been entered into since the date two years before the commencement of the Proposal except for the Restructuring Agreement.

7. DIVIDEND

The following information was extracted from the audited financial statements of Akai for the year ended 31 January 1998.

Group 1998 1997 US$’ million US$’ million

Interim dividend paid at HK$0.15 ($0.02) per share on 409 million shares (1997 Ð HK$0.23 ($0.03) per share on 373 million shares) 7.8 11.1 Proposed final dividend at HK$Nil (1997 Ð HK$0.40 ($0.05) per share on 394 million shares) Ð 20.2 Special dividend at HK$Nil (1997 Ð HK$0.20 ($0.03) per share on 394 million shares) Ð 10.0

7.8 41.3

The dividends per share for both years are calculated before the adjustment for the bonus issue of 3 for 1 share in December 1997.

Note: no dividend was declared in the year ended 31 January 1999.

Ð 204 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

The following is the text of the auditors’ report on the financial statements of the Akai Group for the period from 1 February 1998 to 31 January 1999 extracted from the Akai’s 1999 annual report. References to page numbers are to the page numbers of such financial statements presented in Akai’s 1999 annual report. Akai was formerly known as Semi-Tech (Global) Company Limited, changing its name to Akai Holdings Limited on 5 August 1999.

ERNST & YOUNG

To the members Semi-Tech (Global) Company Limited (Incorporated in Bermuda with limited liability)

We have audited the financial statements on pages 21 to 56 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

The Company’s directors are responsible for the preparation of financial statements which give a true and fair view. In preparing financial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you.

BASIS OF OPINION

We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes an examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s and the Group’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for our opinion.

OPINION

In our opinion the financial statements give a true and fair view, in all material respects, of the state of affairs of the Company and of the Group as at 31 January 1999 and of the loss and cash flows of the Group for the year then ended and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.

Ernst & Young Certified Public Accountants

Hong Kong 26 June 1999

Ð 205 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

The following is the audited consolidated results of Akai for the year ended 31 January 1999 together with the relevant notes as extracted from the 1999’s annual report of Akai.

CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 31 January 1999 (in millions of United States dollars, except per share dollars)

1999 1998 US$m US$m

TURNOVER $ 832.7 $ 1,441.5

OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS $ 8.8 $ 27.3

Exceptional items (78.9) 28.9

PROFIT/(LOSS) BEFORE SHARE OF RESULTS OF ASSOCIATED COMPANIES (70.1) 56.2

Share of results of associated companies Operating profits less losses (4.8) 14.6 Exceptional items (21.6) Ð

PROFIT/(LOSS) BEFORE TAXATION (96.5) 70.8

Taxation (1.2) (13.0)

PROFIT/(LOSS) BEFORE MINORITY INTERESTS (97.7) 57.8

Minority interests 25.9 (21.0)

NET PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS (71.8) 36.8

Retained profits at beginning of year 512.5 483.5

RETAINED PROFITS AVAILABLE FOR DISTRIBUTION 440.7 520.3

Dividends Ð (7.8)

RETAINED PROFITS AT END OF YEAR $ 440.7 $ 512.5

EARNINGS/(LOSS) PER SHARE Basic $ (0.04) $ 0.02

Diluted $ N/A $ 0.02

Profits are retained in the Group as follows: Company and subsidiaries $ 480.1 $ 525.1 Associated companies (39.4) (12.6)

$ 440.7 $ 512.5

See accompanying notes Ð 206 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEET 31 January 1999 (in millions of United States dollars)

1999 1998 US$m US$m

FIXED ASSETS$ $ 499.8 $ 525.5 INTERESTS IN ASSOCIATED COMPANIES 136.8 115.0 OTHER LONG TERM ASSETS 796.0 815.5 CURRENT ASSETS 892.2 1,334.7 CURRENT LIABILITIES (828.9) (1,169.0) NET CURRENT ASSETS 63.3 165.7

TOTAL ASSETS LESS CURRENT LIABILITIES 1,495.9 1,621.7 LONG TERM LIABILITIES (215.6) (236.2) DEFERRED INCOME (19.0) (14.0) MINORITY INTERESTS (211.5) (258.6)

$ 1,049.8 $ 1,112.9 CAPITAL AND RESERVES Share capital $ 24.7 $ 212.8 Reserves 584.4 387.6 Retained profits 440.7 512.5

$ 1,049.8 $ 1,112.9

James Henry Ting Chuck Cheuk Hung Tam Director Director

See accompanying notes

Ð 207 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENT Year ended 31 January 1999

1999 1998 US$m US$m

NET CASH INFLOW FROM OPERATING ACTIVITIES $ 19.3 $ 78.6

RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 17.3 16.3 Interest paid (32.4) (49.4) Interest element of finance lease payments (1.5) (0.6) Dividends received from unlisted investments 0.7 0.1 Dividends received from associated companies Ð 6.7 Dividends paid to shareholders Ð (13.5)

Dividends paid to minority shareholders (1.0) (0.4)

Net cash outflow from returns on investments and servicing of finance (16.9) (40.8)

TAXATION

Hong Kong profits tax paid Ð (0.4) Overseas taxes paid (0.6) (3.6)

TAXES PAID (0.6) (7.6)

INVESTING ACTIVITIES Purchases of fixed assets (30.9) (92.2) Purchases of unlisted investments (10.0) (2.5) Purchases of other assets (12.8) (29.3) Acquisition of a subsidiary (38.3) Ð Investment in an associated company (38.8) Ð Additions to deferred development costs (23.8) Ð Proceeds from the sale of listed investments 2.6 Ð Proceeds from the sale of unlisted investments 3.2 Ð Proceeds from the sale of fixed assets 16.3 63.1 Proceeds from the sale of subsidiaries Ð 198.0 Proceeds from the sale of shares in associated companies Ð 112.1 Disposal of subsidiaries (5.4) Ð Decrease/(increase) in short term bank deposits with maturity over three months (2.7) 51.5

Net cash inflow/(outflow) from investing activities (140.6) 300.7

NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING ACTIVITIES $ (144.2) $ 330.9

See accompanying notes Ð 208 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENT Year ended 31 January 1999 continued

1999 1998 US$m US$m

NET CASH INFLOW/ (OUTFLOW) BEFORE FINANCING ACTIVITIES $ (144.2) $ 330.9

FINANCING ACTIVITIES Issue of ordinary share capital for cash 5.5 22.5 Share placement expenses (0.3) Ð Repurchases of shares Ð (5.7) Issue of long term bonds by a subsidiary Ð 160.5 Redemption of bonds of a subsidiary Ð (146.0) Capital element of finance lease payment (4.3) (4.5) New long term loans 30.6 48.2 Issue of unsecured convertible debentures by a subsidiary 7.0 Ð Repayment of long term bank loans (113.9) (131.1) Repayment of short term borrowings with maturity over three months (13.0) (67.4)

Net cash outflow from financing activities (88.4) (123.5)

INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS (232.6) (207.4)

Cash and cash equivalents at beginning of year 254.2 46.9

Effect of foreign exchange rate changes (9.1) (0.1)

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 12.5 $ 254.2

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS

Cash and bank balances and other liquid funds $ 262.0 $ 429.9 Banks loans and overdrafts (424.3) (362.9)

(162.3) 67.0

Less: short term bank deposits with maturity over three months (16.6) (13.9)

Add: short term borrowings with maturity over three months 191.4 201.1

$ 12.5 $ 254.2

See accompanying notes Ð 209 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

BALANCE SHEET 31 January 1999

1999 1998 US$m US$m

FIXED ASSETS $ 7.3 $ 8.0 INTERESTS IN SUBSIDIARIES 778.1 787.1 OTHER LONG TERM ASSETS 4.6 79.6

CURRENT ASSETS 271.7 333.6 CURRENT LIABILITIES (47.6) (137.6)

NET CURRENT ASSETS 224.1 196.0

TOTAL ASSETS LESS CURRENT LIABILITIES 1,041.1 1,070.7 DEFERRED INCOME (13.3) (13.3)

$ 1,000.8 $ 1,057.4

CAPITAL AND RESERVES Share capital $ 24.7 $ 212.8 Reserves 626.7 433.4 Retained profits 394.4 411.2

$ 1,000.8 $ 1,057.4

James Henry Ting Chuck Cheuk Hung Tam Director Director

See accompanying notes

Ð 210 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting These financial statements have been prepared in accordance with accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance.

Basis of consolidation The consolidated financial statements include the financial statements of the Company and all its subsidiaries for the year ended 31 January 1999, except for the companies comprising the former Nokia colour television business. It is neither practical to change their accounting and group reporting date to 31 January nor possible to produce separate audited financial statements drawn up to 31 January 1999 for purposes of consolidation without adversely affecting the timely release of the Group’s financial statements. Appropriate adjustments that are material relating to the intervening period, if any, have been made to the consolidated financial statements of the Group in order to ensure that a true and fair view has been presented. The results of subsidiaries acquired or disposed of during the year are included in the consolidated financial statements from or to their respective dates of acquisition or disposal. All significant intercompany transactions and balances have been eliminated on consolidation.

Revenue recognition Revenue is recognised when it is probable that the economic benefits will flow to the Group and when revenue can be measured reliably. On the sale of goods, revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Group maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold. Interest income is recognised on a time proportion basis taking into account the principal outstanding and the effective interest rate applicable, and dividend income is recognised when the shareholders’ rights to receive payment is established.

Goodwill and capital reserve Goodwill arising on consolidation of subsidiaries and on acquisition of associated companies represents the excess of the purchase consideration paid for subsidiaries/associates, including related costs, over the fair value ascribed to the net underlying assets acquired at the dates of acquisition and is amortised on the straight-line basis over a period of 40 years.

Capital reserve on consolidation represents the excess of the purchase consideration for the acquired subsidiaries or associated companies over the fair values ascribed to such subsidiaries or associated companies’ net underlying assets at the date of acquisition.

Subsidiaries A subsidiary is a company in which the Company, directly or indirectly, controls more than half of its voting power on issued share capital or controls the composition of its board of directors.

Shares in subsidiaries in the Company’s balance sheet are stated at cost less provisions for permanent diminutions in values where appropriate.

Associated companies An associated company is a company, not being a subsidiary, in which the Group has a long term interest of greater than 20% of the equity voting rights and over whose financial and operating policy decisions the Group is in a position to exercise significant influence.

The Group’s share of the post-acquisition results of associated companies is included in the consolidated profit and loss account. The Group’s investments in associated companies are stated in the consolidated balance sheet at the Group’s share of net assets.

Discount on acquisition of associated companies represents the excess fair value ascribed to the underlying net assets acquired over the purchase consideration paid for the associated companies and is credited to capital reserve in the year of acquisition.

Related parties Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party, or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence.

Ð 211 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

Fixed assets and depreciation

Fixed assets are stated at cost less accumulated depreciation.

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

Depreciation is provided using either the straight-line or reducing balance method to write off the cost of each asset over its estimated useful life. The principal annual rates used for this purpose are as follows:

Leasehold land and buildings : 2% to 20%

Machinery and equipment : 5% to 50%

Other fixed assets : 5% to 50%

No depreciation is provided for freehold land.

The gain or loss on disposal or retirement of a fixed asset recognised in the profit and loss account is the difference between the sales proceeds and the carrying amount of the relevant asset.

Inventories Inventories are stated at the lower of cost, on the first-in, first-out or weighted average basis, and net realisable value.

The cost of finished goods and work in progress includes direct materials, direct labour and an appropriate proportion of manufacturing overheads based on normal levels of activity. Net realisable values are based on estimated selling prices less any further costs expected to be incurred to completion and disposal.

Investments Investments held on a long term basis are stated at cost less provisions for any permanent diminutions in values.

Trademarks and patents Trademarks and patents are stated at cost less provisions for any permanent diminutions in values.

Deferred development cost Expenditure incurred on projects in developing new products in capitalised and deferred only when the projects are clearly defined, the expenditure is separately identifiable and there is a reasonable certainty that the projects are technically feasible and the products have commercial value. Product development expenditure which does not meet these criteria and research expenditure are expensed when incurred.

Deferred development costs are amortised, using the straight-line basis, over the expected useful life of the products, commencing in the year when the products are put into commercial production.

Deferred taxation Deferred taxation is provided under the liability method for all significant timing differences in the recognition of revenue and expenses for tax and for financial reporting purposes, except where it is considered to be probable that the tax effects of such deferrals will continue in the foreseeable future. A deferred tax asset is not recognised unless its realisation is assured beyond reasonable doubt.

No provision has been made for taxes which would arise on the remittance to Hong Kong of retained profits of overseas companies as it is not anticipated that these amounts will be remitted in the near future.

Foreign currencies Foreign currency transactions are recorded at the applicable rates of exchange ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange ruling at that date. Exchange differences are dealt with in the profit and loss account.

On consolidation, the financial statements of overseas subsidiaries, associated companies and branches are translated at the applicable market rates of exchange ruling at the balance sheet date. The resulting translation differences are included in the currency translation reserve. Ð 212 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

Leased assets Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, other than legal title, are accounted for as finance leases. At the Inception of a finance lease, the cost of the leased asset is capitalised at the present value of the minimum lease payments and recorded together with the obligation, excluding the interest element, to reflect the purchase and financing. Assets held under capitalised finance leases are included in fixed assets and depreciated over the shorter of the lease terms and the estimated useful lives of the assets. The finance costs of such leases are charged to the profit and loss account so as to provide a constant periodic rate of charge over the lease terms.

Operating leases Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases. Rentals applicable to such operating leases are charged to the profit and loss account on the straight-line basis over the lease terms.

Pension schemes The Group’s pension schemes relate principally to its subsidiaries’ operations located in Japan and Finland. The principal pension schemes operated are defined benefit plans under which retirement benefits are based on the retiring employees’ compensation and years of service and determined in accordance with the local practice and regulations. On consolidation, all pension liabilities existing on the date of acquisition of the above-mentioned subsidiaries have been accounted for based on actuarial reports using the entry age normal method, prepared by independent Japanese actuary, Mitsubishi Trust and Banking Corp., Actuary Section; and Finnish actuary, IImarinen and Varma.

Post-acquisition pension costs are accounted for on a cash basis. As at 31 January 1999, the Group has no unprovided pension liabilities (1998: $Nil).

Cash and cash equivalents and other liquid funds For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, amounts payable on demand from banks and financial institutions and other liquid funds, less advances from banks and financial institutions repayable within three months from the date of the advance. Other liquid funds represent short term liquid investments which are convertible into known amounts of cash and which were within three months of maturity when acquired.

2. RELATED PARTY TRANSACTIONS

The Group has adopted the provisions of paragraph 28 of Statements of Standard Accounting Practice No. 20 (“SSAP 20”), “Related Party Disclosures; which provides an exemption from the requirement to present comparative information for prior periods when SSAP 20 is first adopted and such information is not available.

(a) The Group had the following material transactions with related parties during the year:

Notes 1999

Sales to subsidiaries of STC 1 $ 34.9

Sales to related companies 2 36.3

Sales to associated companies 3 2.9

Purchases from related companies 4 17.3

Purchases from associated companies 5 1.1

Interest income from an associated company 6 2.3

Interest income from STC 7 1.1

Guarantee fee income from a subsidiary of STC 8 1.0

Dividend income from a subsidiary of STC 9 5.6

(1) Sales to The Singer Company N.V. and its subsidiaries (the “Singer group”), which are subsidiaries of STC, are made according to published prices and conditions similar to those offered to other customers of the Group. The balances due from and to the Singer group amounted to $53.3 and $12.2, respectively, as at 31 January 1999. The trading balances are unsecured, bear interest at the local prevailing rates to the extent they were outstanding beyond the normal trade terms and have no fixed terms of repayment.

Ð 213 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

(2) Sales to Makonka Electric Sdn. Bhd. and its group companies (the “Makonka group”), which are long term investments of the Group, are made according to published prices and conditions similar to those offered to other customers of the Group.

(3) Sales to Sansui Electric Co. Ltd. and its subsidiaries (the “Sansui group”) and Tomei International (Holdings) Ltd. and its subsidiaries (the “Tomei group”) are made according to published prices and conditions similar to those offered to other customers of the Group. The balances due from the Sansui group amounted to $7.5 as at 31 January 1999. The balances due from and to the Tomei group amounted to $1.0 and $5.2, respectively, as at 31 January 1999. The balance due to the Tomei group represents a deposit received from the Tomei group to procure certain sales which were cancelled subsequent to 31 January 1999 and $4.9 was refunded accordingly. The balances due are unsecured, interest-free and have no fixed terms of repayment.

(4) Purchases from the Makonka group are made according to published prices and conditions similar to those offered to other customers of the Makonka group.

(5) Purchases from the Sansui group are made according to the published prices and conditions similar to those offered to other customers of the Sansui group.

(6) The interest income was derived from loans made to the Sansui group. The loans are unsecured, bear interest at rates ranging from 6% per annum to 8.5% per annum and have no fixed repayment terms. The principal of the loans amounted to $43.3, against which a provision of $25.6 was made as at 31 January 1999.

(7) The interest income was derived from loans made to STC. The loans are unsecured, bear interest at 8.5% per annum and have no fixed repayment terms. The principal of the loans amounted to $14.8 a$ at 31 January 1999.

(8) The guarantee fee income was derived from corporate guarantees executed by the Group in favour of banks for banking facilities granted to G. M. Pfaff AG (“Pfaff”), a subsidiary of the Singer group, during the year. The Group received guarantee fee income based on 1% per annum of the total corporate guarantees executed by the Group for the period from 1 February 1998 to 31 October 1998 and 3% per annum since 1 November 1998. The total banking facilities granted to Pfaff that were guaranteed by the Group in the form of corporate guarantees amounted to $14.7 as at 11 January 1999.

(9) Dividend income was derived from the $75.0 Singer convertible preferred stocks which carry a cumulative dividend’ rate of 7.5% per annum.

(a) The Group executed corporate guarantees to the extent of $66.8 for banking facilities jointly used by the Sansui group and a subsidiary as at 31 January 1999 at nil consideration.

(b) As at 31 January 1999, approximately 331 million ordinary shares of Tomei International (Holdings) Ltd. (“Tomei”) held by the Sansui group were pledged to secure a loan of $12.0 granted by a bank to the Group.

3. TURNOVER AND REVENUE

Group 1999 1998

Total turnover Ð sales of goods $ 832.7 $ 1,441.5 Interest income 18.4 17.6 Dividend income 6.3 0.1

Total revenue $ 857.4 $ 1,459.2

Turnover represents the net invoiced value of goods sold after allowances for returns and trade discounts but excludes intra-group transactions.

Ð 214 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

4. OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS

Operating profit before exceptional items is determined:

Group 1999 1998

After charging: Cost of inventories sold $ 691.1 $ 1,105.6

Depreciation: Own assets 35.9 43.3

Under finance leases 0.4 0.5 Loss/(gain) on disposal of fixed assets 10.4 (0.8) Loss on disposal of long term listed investment 0.1 Ð Amortisation of deferred development costs 2.9 Ð Amortisation of goodwill 4.0 4.0 Pension expense 2.4 5.0 Operating lease rentals: Land and buildings 3.2 13.9 Others 2.5 2.2

Interest expense on: Bank loans and overdrafts wholly repayable within five years 32.8 46.7 Bank loans and overdrafts not wholly repayable within five years 0.5 0.6 Finance leases 1.8 0.9 Others 1.5 6.5 Auditors’ remuneration 2.0 3.0

After crediting: Interest income 18.4 17.6 Exchange gains, net 4.2 5.7 Dividend income 6.3 0.1

Ð 215 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

5. EXCEPTIONAL ITEMS

Group 1999 1998

The company and subsidiaries: Gain on disposal of associated companies $ Ð $ 37.9 Loss on disposal of subsidiaries Ð (4.3) Loss on dilution of interest in an associated company Ð (5.8) Gain on redemption of convertible bonds of a subsidiary Ð 22.0 Provision for one-off product warranty expenses Ð (4.3) Reorganisation and relocation expenses (9.2) (12.7) Accounts receivable written off (15.6) (3.9) Provision for receivable from an associated company (25.6) Ð Provision for diminution in value of an unlisted investment (26.2) Ð

Gain on disposal of unlisted investments 3.2 Ð Provision for guarantees issued to disposed subsidiaries (5.5) Ð

(78.9) 28.9

Associated companies: Loss arising from business restructuring (1.1) (0.1) Write-off of deferred development costs and deficit on revaluation of investment properties (0.5) (0.3) Provision for diminutions in values of listed investments (2.2) (0.1) Provision for diminutions in values of unlisted investments (0.1) (0.4) Gain on disposal of long term listed investments Ð 0.9 Provision for diminution in value of an investment in an associated company (17.7) Ð

(21.6) Ð

6. DIRECTORS’ REMUNERATION

Group 1999 1998

Fees $0.1$0.1 Other emoluments 2.3 2.3

$2.4$2.4

Ð 216 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

7. TAXATION

Group 1999 1998

Subsidiaries Ð Hong Kong $ 0.3 $ 2.8 Ð Overseas 4.0 7.8 Ð Overprovision in prior year (3.5) Ð

0.8 10.6 Associated companies Ð Hong Kong 0.4 0.7 Ð Overseas Ð 2.1

1.2 13.4 Deferred taxation Ð Overseas Ð (0.4)

Taxation charge for the year $ 1.2 $ 13.0

The provision for Hong Kong profits tax has been calculated by applying the applicable tax rate of 16% (1998:16.5%) to the estimated assessable profits which, in the opinion of the directors, were earned in or derived from Hong Kong during the year. Provision for overseas profits taxes attributable to the operations of foreign subsidiaries is based on their respective assessable profits for the year calculated at applicable tax rates based on existing legislation, interpretations and practices in relation thereto.

Movements in the deferred tax liabilities of the Group during the year are as follows:

1999 1998

At beginning of year $0.2$0.6 Written back form profit and loss account Ð (0.4) At balance sheet date $0.2$0.2

The deferred tax liabilities of the Group relate primarily to accelerated depreciation allowances. There were no significant unprovided deferred tax liabilities at the balance sheet date.

The Company did not have any significant unprovided/unrecognised deferred tax liabilities/assets at the balance sheet date.

8. NET PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS

The net loss for the year of the Company dealt with in the consolidated profit and loss account amounted to $61.8 (1998: profit $10.4).

9. DIVIDENDS

Group 1999 1998

Interim dividend paid at HK$Nil (1998: HK$0.15 ($0.02) per share on 409 million shares) $ Ð $ 7.8

$Ð$7.8

The directors do not recommend the payment of a final dividend for the year (1998: HK$Nil).

Ð 217 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

10. EARNINGS/(LOSS) PER SHARE

The calculation of basic loss per share is based on the net loss attributable to shareholders for the year of $71.8 (1998: profit of $36.8) and the weighted average number of 1,876.8 million shares in issue during the year. The weighted average number of 1,759.8 million shares for 1998 has been adjusted to reflect the bonus issue of 1 for 10 shares which occurred during the year ended 31 January 1999.

As the exercise prices of the outstanding share options and warrants of the Company, including those which lapsed during the year, were greater than the average market price of the Company’s shares during the year, no diluted loss per share has been calculated for the year ended 31 January 1999.

The diluted earnings per share of 1998 has been re-stated in accordance with the revised Hong Kong Statements of Standard Accounting Practice No.5 “Earnings per share” issued during the year. Diluted earnings per share for 1998 is calculated based on the net profit attributable to shareholders of $36.8 and 1,762.6 million shares, which represents the weighted average number of 1,759.8 million shares in issue during the year, plus the weighted average number of 2.8 million shares deemed to be issued for no consideration if all dilutive outstanding warrants and options of the Company had been exercised at the beginning of that year.

The outstanding warrants, options and convertible debentures issued by the subsidiaries and associated companies of the Company have no dilutive effect on the basic loss per share for 1999 and the basic earnings per share for 1998.

11. FIXED ASSETS

The Group

Machinery Other Land and and fixed Buildings equipment assets Total

Cost: At beginning of year $ 410.9 $ 176.6 $ 44.0 $ 631.5 Additions 0.8 34.3 4.8 39.9 Disposal of subsidiaries (2.3) (3.1) (0.2) (5.6) Disposals (9.3) (17.2) (2.1) (28.6) Exchange adjustments 1.4 1.4 0.1 2.9

At 31 January 1999 401.5 192.0 46.6 640.1

Accumulated depreciation: At beginning of year 20.9 65.2 19.9 106.0 Provided during the year 3.5 27.6 5.2 36.3 Disposal of subsidiaries (0.3) (0.5) (0.2) (1.0) Disposals (0.1) (1.5) (0.3) (1.9)

Exchange adjustments 0.4 0.5 Ð 0.9

At 31 January 1999 24.4 91.3 24.6 140.3

Net book value: At 31 January 1999 $ 377.1 $ 100.7 $ 22 $ 499.8

At 31 January 1998 $ 390.0 $ 111.4 $ 24.1 $ 525.5

Net book value of assets held under finance leases: At 31 January 1999 $ 4.1 $ 6.2 $ 1.8 $ 12.1

At 31 January 1998 $ 4.0 $ 12.5 $ 1.8 $ 18.3

Ð 218 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

The Group’s land and buildings comprise, at cost:

1999 1998

Medium lease land and buildings in Hong Kong $ 20.5 $ 19.7 Long lease land and buildings in Hong Kong 15.4 $ 15.4 Medium lease land and buildings outside Hong Kong 39.3 45.7 Long lease land and buildings outside Hong Kong 10.0 10.0 Freehold land and buildings outside Hong Kong 316.3 320.1

$ 401.5 $ 410.9

The Company

Leasehold Other land and fixed buildings assets Total

Cost: At beginning of year $ 3.9 $ 6.9 $ 10.8 Additions Ð0.50.5

At 31 January 1999 3.9 7.4 11.3

Accumulated depreciation: At beginning of year 0.2 2.6 2.8 Provided during the year 0.1 1.1 1.2

At 31 January 1999 0.3 3.7 4.0

Net book value: At 31 January 1999 $ 3.6 $ 3.7 $ 7.3

At 31 January 1998 $ 3.7 $ 4.3 $ 8.0

The Company’s leasehold land and buildings are held on long leases outside Hong Kong.

The other fixed assets of the Group and the Company comprise leasehold improvements, furniture, fixtures, other office equipment and motor vehicles.

Ð 219 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

12. INTERESTS IN SUBSIDIARIES

Company

1999 1998

Shares, at cost: Listed overseas $ 501.3 $ 439.0 Unlisted 187.9 165.4

689.2 604.4 Due from subsidiaries 287.1 345.7

976.3 950.1 Due to subsidiaries (198.2) (163.0)

$ 778.1 $ 787.1

Market value of listed shares $ 172.3 $ 203.6

The balances with subsidiaries are unsecured, bear interest at the local prevailing rates to the extent they were outstanding beyond the normal trade terms and have no fixed terms of repayment. Particulars of the principal subsidiaries are set out in note 28 to the financial statements.

13. INTERESTS IN ASSOCIATED COMPANIES

Group Company 1999 1998 1999 1998

Share of net tangible assets $ 69.2 $ 59.4 $ Ð $ Ð

Share of intangible assets, excluding goodwill 84.1 72.1 Ð Ð

Discount on acquisition (16.5) (16.5) Ð Ð

$ 136.8 $ 115.0 $ Ð $ Ð

Market value of listed shares $ 48.3 $ 85.1 $ Ð $ Ð

Ð 220 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

Particulars of the principal associated companies are as follows:

Place of incorporation Issued Class of Proportion and share share- held Nature of Name operations capital holding directly indirectly business

ST Credit Bermuda US$12,000 Ordinary 50% Ð Money Company lending Limited

Sansui Electric Japan Yen 59,296 Ordinary Ð 29.67% Manufacture Co., Ltd. million and distribution of audio and visual products

MicroMain British Virgin US$1,724 Ordinary 50% Ð Investment Systems Ltd. Islands holding

Tomei Bermuda HK$21 Ordinary Ð 35.30% Manufacture International million and trading (Holdings) Ltd. of electric (now known as products “Toyo Holdings Limited”)

The above table lists the associated companies of the Company as at 31 January 1999 which, in the opinion of the directors, either principally affected the results for the year, or formed a substantial portion of the net assets of the Group. To give details of other associated companies would, in the opinion of the directors, result in particulars of excessive length.

Part of the Group’s interests in Tomei are held through Sansui Electric Co., Ltd. (“Sansui”). The Group had indemnified Sansui against any loss on disposal of its investment in Tomei and Sansui had agreed to sell its interests in Tomei to the Group if it exercised such an indemnity. The indemnity was not renewed subsequent to the balance sheet date.

The Group’s interests in Sansui are held through Akai Electric Co., Ltd. (“Akai”). The Group has indemnified Akai against any loss on disposal of its investment in Sansui.

The Group’s share of aggregate losses retained by the associated companies for the year amounted to $26.8 (1998: $17.1).

Ð 221 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

14. OTHER LONG TERM ASSETS

Group Company 1999 1998 1999 1998

Investments, at cost: Listed overseas $ 0.6 $ 3.3 $ Ð $ Ð

Unlisted 114.8 167.6 Ð Ð

115.4 170.9 Ð Ð

Other assets 519.1 498.4 4.6 79.6

Deferred development costs: Cost: At beginning of year ÐÐÐÐ Additions 23.8 Ð Ð Ð

At 31 January 23.8 Ð Ð Ð

Amortisation: At beginning of year ÐÐÐÐ Provided during the year 2.9 Ð Ð Ð

At 31 January 2.9 Ð Ð Ð

Net book value 20.9 Ð Ð Ð

Goodwill on consolidation: Cost: At beginning of year 152.0 202.5 Ð Ð Disposals (1.6) (50.5) Ð Ð

At 31 January 150.4 152.0 Ð Ð

Amortisation: At beginning of year 5.8 6.5 Ð Ð Provided during the year 4.0 4.0 Ð Ð Disposals Ð (4.7) Ð Ð

At 31 January 9.8 5.8 Ð Ð

Net book value 140.6 146.2 Ð Ð

$ 796.0 $ 815.5 $ 4.6 $ 79.6

Market value: Investments listed overseas $ 2.2 $ 8.1 $ Ð $ Ð

Other assets include trademarks and patents amounting to $483.4 ($359.1 - net of minority interests) (1998: $488.5, $341.6 - net of minority interests), lease rights and deposits.

Ð 222 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

15. CURRENT ASSETS

Group Company 1999 1998 1999 1998

Cash and bank balances and other liquid funds $ 262.0 $ 429.9 $ 118.9 $ 241.7 Accounts receivable and prepayments 370.7 656.6 77.8 91.9 Inventories 184.5 248.2 Ð Ð Investment held for disposal 75 Ð 75.0 Ð

$ 892.2 1,334.7 $ 271.7 $ 333.6

Included in accounts receivable and prepayments are receivables from associated companies amounting to $26.2, after the provision of $25.6 (1998: $24.1). The details of the terms of the receivables from associated companies have been disclosed in note 2 to the financial statements.

16. INVENTORIES

Group 1999 1998

Raw materials $ 57.7 $ 76.0 Work in progress 18.1 31.4 Finished goods and merchandise 108.7 140.8

$ 184.5 $ 248.2

The carrying amount of inventories included in the above that are carried at net realisable value was $27.8 (1998: $26.2).

As at 31 January 1999, the carrying amount of inventories of the Group pledged as security for liabilities amounted to $8.9 (1998: $Nil).

17. CURRENT LIABILITIES

Group Company 1999 1998 1999 1998

Bank loans and overdrafts $ 424.3 $ 362.9 $ 23.6 $ 109.3

Current portion of long term bank loans 45.6 102.3 Ð Ð 469.9 465.2 23.6 109.3

Accounts payable and accruals 349.3 692.1 24.0 28.3

Finance lease payables 3.7 3.3 Ð Ð

Taxation 6.0 8.4 Ð Ð

$ 828.9 $ 1,169.0 $ 47.6 $ 137.6

Included in accounts payable and accruals are payables to an associated company amounting to $5.2 (1998: $Nil). The details of the terms of the payables to the associated company have been disclosed in note 2 to the financial statements.

Ð 223 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

18. BANK LOANS, OVERDRAFTS AND BANKING FACILITIES

Group Company 1999 1998 1999 1998

Bank loans and overdrafts maturing: Within one year $ 469.9 $ 465.2 $ 23.6 $ 109.3 In the second year 116.5 60.3 Ð Ð In the third of fifth years, inclusive 66.3 144.0 Ð Ð Beyond five years 0.3 7.5 Ð Ð

$ 653.0 $ 667.0 $ 23.6 $ 109.3

The majority of the bank loan facilities were undertaken by subsidiaries’ operations whose borrowings are primarily denominated in local currencies. Facilities of certain operations are supported by pledges of real estate, shares in certain subsidiaries and associated companies, general pledges of assets, guarantees, standby letters of credit, and similar security arrangements.

The Group had guaranteed certain banking facilities jointly used by the Sansui group and a subsidiary amounting to $66.8 (1998: $90.3) as at 31 January 1999. In addition, the Group had guaranteed certain facilities granted to the former subsidiaries now disposed of amounting to $14.7 (1998: $41.0) as at 31 January 1999.

With respect to financial covenants given by the Group in support of certain bank borrowings, only one financial covenant relating to an interest cover ratio is not complied with by a subsidiary of the Group. The directors are of the view that the failure to comply with this ratio does not have any material adverse impact on the Group’s operations.

19. FINANCE LEASE PAYABLES

There were commitments under non-cancellable finance leases at the balance sheet date as follows:

Group 1999 1998

Amounts repayable: Within one year $3.7$3.3

In the second to fifth years, inclusive 8.9 4.3 Beyond five years 1.6 1.9

14.2 9.5 Portion classified as current liabilities 3.7 3.3

$ 10.5 $ 6.2

Ð 224 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

20. LONG TERM LIABILITIES Group Company 1999 1998 1999 1998

Bank loans $ 183.1 $ 211.8 $ Ð $ Ð Finance lease payables 10.5 6.2 Ð Ð Pension obligations 14.8 18.0 Ð Ð Unsecured convertible debentures due January 2001 7.0 Ð Ð Ð

Deferred taxation 0.2 0.2 Ð Ð

$ 215.6 $ 236.2 $ Ð $ Ð

On 29 January 1999, a wholly-owned subsidiary of the Company has issued $7 in face value of unsecured convertible debentures (“Debentures”) entitling a third party investor to convert the Debentures into existing ordinary shares of Akai Electric Co., Ltd. under certain agreed terms and conditions.

21. SHARE CAPITAL

Thousands of shares

Authorised: Ordinary shares of HK$0.10 per share 30,000,000 $ 384.6

Issued and fully paid ordinary shares: At beginning of year (ordinary shares of HK$1.00 per share) 1,660,275 $ 212.8 Reduction of share capital as authorised by a resolution passed at a general meeting of the Company on 23 July 1998 Ð (191.6)

Bonus issue of 1 for 10 on 30 July 1998 166,027 2.1 New issue on 24 August 1998 106,000 1.4

At 31 January 1999 (ordinary shares of HK$0.10 per share) 1,932,302 $ 24.7

On 27 May 1998, the directors of the Company proposed for adjustment of nominal value of the Company’s shares (“Adjustment Proposal”). Under the proposal, the nominal value of the issued shares of the Company was adjusted from HK$1.0 each to HK$0.10 each by cancelling paid-up capital to the extent of HK$0.9 on each of the issued shares of the Company. Accordingly, the issued share capital was adjusted from 1,660,274,627 shares of HK$1.00 each to 1,660,274,627 shares of HK$0.10 each, resulting in a credit of $191.6 being transferred to the contributed surplus account of the Company. The authorised and unissued share capital of the Company was subdivided into shares of new nominal value of HK$0.10 each. The Adjustment Proposal was approved by the shareholders at a general meeting on 23 July 1998.

On 23 July 1998, a resolution was passed by the shareholders at a general meeting for the issuance of bonus shares on the basis of one new share for every ten shares then held by way of capitalisation of the share premium of the Company. Accordingly, 166,027,462 new shares of HK$0.10 each of the Company was allotted, issued and credited as fully paid by way of capitalisation of $2.1 of the share premium of the Company. The issuance of bonus shares was completed on 30 July 1998.

On 24 August 1998, the Company issued 106,000,000 new shares of HK$0.10 each (“New Shares”) at a price of HK$0.40 per share for cash pursuant to a private placement and subscription. The excess of the proceeds on the issue of New Shares over their par value, net of the related issue expenses, has been credited to the share premium account.

Employee share options Under the Company’s employee share option scheme, the board of directors may at any time, during the period from 25 July 1995 to 24 July 2005, grant options to subscribe for shares in the Company to any eligible employees including executive directors. The subscription price is the higher of the nominal value of the shares, and 80% of the average of the closing share price for the five trading days immediately preceding the offer of the option. The maximum number of shares in respect of which options may be granted, together with options exercised and options then outstanding under the scheme, may not exceed 10% of the issued share capital of the Company at the time of granting of such options excluding any shares issued pursuant to the scheme. Ð 225 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

Under the scheme, no options were granted during the year ended 31 January 1999. During the year ended 31 January 1999, no options were exercised and options to subscribe for 7.0 million shares expired. At 31 January 1999, there were outstanding options to subscribe for 43.6 million shares (1998: 50.6 million shares, adjusted for the 1 for 10 bonus issue). These share options are exercisable at prices ranging from HK$1.6636 to HK$2.1091 per share (adjusted for the 1 for 10 bonus issue) from the date of grant of the options to the expiry dates, which range from 16 March 2000 to 28 August 2000.

Warrants During the year, registered holders with warrant rights of HK$132 exercised their rights to subscribe for 40 shares in the Company at $0.4 (HK$3.3) per share.

On 31 July 1998, all the Company’s outstanding warrants expired.

As at 31 January 1999, the Company had no outstanding warrants. 22. RESERVES

Group Company 1999 1998 1999 1998

Share of net tangible assets $ 69.2 $ 59.4 $ Ð $ Ð

Share premium account: At beginning of year $ 140.0 $ 257.7 $ 140.0 $ 257.7 Premium on issue of ordinary shares under: New Issue 4.1 Ð 4.1 Ð New Issue expenses (0.3) Ð (0.3) Ð

1 for 10 bonus issue (2.1) Ð (2.1) Ð Scrip dividend scheme Ð 19.9 Ð 19.9 Exercises of warrants and options Ð 20.0 Ð 20.0 3 for 1 bonus issue Ð (157.6) Ð (157.6)

At 31 January 141.7 140.0 141.7 140.0

Contributed surplus: At beginning of year 278.8 284.5 292.1 297.8 Reduction of share capital 191.6 Ð 191.6 Ð Repurchases of shares Ð (5.7) Ð (5.7)

At 31 January 470.4 278.8 483.7 292.1

Capital redemption reserve: At beginning of year 1.3 0.9 1.3 0.9 Transfer from contributed surplus on repurchases of shares during the year Ð 0.4 Ð 0.4

At 31 January 1.3 1.3 1.3 1.3

Capital reserve: At beginning of year Ð 12.4 Ð 12.4

Arising on additional investment in a subsidiary 6.6 Ð Ð Ð Issue of scrip dividend Ð (12.4) Ð (12.4)

At 31 January 6.6 Ð Ð Ð

Currency translation reserve: At beginning of year (32.5) (39.4) Ð Ð Additions (4.1) (2.7) Ð Ð Disposal of subsidiaries 1.0 9.6 Ð Ð

At 31 January (35.6) (32.5) Ð Ð

Total reserves: At 31 January $ 584.4 $ 387.6 $ 626.7 $ 433.4

At beginning of year $ 387.6 $ 516.1 $ 433.4 $ 568.8

As at 31 January 1999, the currency translation deficit attributable to the Group’s associated companies included in the currency translation reserve amounted to $28.6 (1998: $25.2).

Ð 226 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

The contributed surplus of the Group arose as a result of the reorganisation scheme in June 1992 and originally represented the difference between the nominal value of the shares and the share premium account of the former holding company of the Group, and the nominal amount of the shares of the Company allotted and issued under the reorganisation.

The contributed surplus of the Company arose as a result of the same reorganisation and originally represented the difference between the consolidated shareholders’ funds of the former holding company of the Group and the nominal amount of the shares of the Company allotted and issued under the reorganisation. The reserve is available for distribution to shareholders of the Company under present Bermuda law. However, it is the intention of the directors of the Company that any amounts in the contributed surplus account will not be distributed by the Company in the future.

23. RETAINED PROFITS

Group Company 1999 1998 1999 1998 Share of net tangible assets $ 69.2 $ 59.4 $ Ð $ Ð

Retained profits: At beginning of year $ 512.5 $ 483.5 $ 411.2 $ 408.6 Net profit/(loss) for the year (71.8) 36.8 (61.8) 10.4 Dividends Ð (7.8) Ð (7.8)

At 31 January $ 440.7 $ 512.5 $ 349.4 $ 411.2

24. COMMITMENTS

Operating lease commitments

Payments in respect of non-cancellable operating leases, committed to be made

During the next year, at the balance sheet date were as follows:

Group Company 1999 1998 1999 1998 Share of net tangible assets $ 69.2 $ 59.4 $ Ð $ Ð

Land and buildings: Expiring: Within one year $ 0.1 $ 3.6 $ Ð $ Ð In the second to fifth years, inclusive 1.4 7.6 Ð Ð Beyond five years Ð 1.7 Ð Ð

$ 1.5 $ 12.9 $ Ð $ Ð

Others:

Expiring: Within one year 0.2 0.2 Ð Ð

In the second to fifth years, inclusive 0.8 0.9 Ð Ð

1.0 1.1 Ð Ð

$ 2.5 $ 14.0 $ Ð $ Ð

Forward exchange contracts $ 37.9 $ 74.3 $ 13.3 $ 10.8

Capital expenditure contracted for $ 8.6 $ 10.3 $ Ð $ Ð

Ð 227 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

25. CONTINGENT LIABILITIES

Group Company 1999 1998 1999 1998

Bills discounted with recourse $ 25.1 $ 7.2 $ Ð $ Ð

26. DETAILS OF THE CONSOLIDATED CASH FLOW STATEMENT

(a) Reconciliation of profit/(loss) before share of results of associated companies to net cash inflow from operating activities

1999 1998

Profit/(loss) before share of results of associated companies $ (70.1) $ 56.2 Interest income (18.4) (17.6) Interest expense 36.6 54.7 Dividend income (6.3) (0.1) Depreciation 36.3 43.8 Loss/(gain) on disposal of fixed assets 10.4 (0.8) Amortisation of deferred development costs 2.9 Ð Amortisation of goodwill 4.0 4.0 Loss on disposal of subsidiaries Ð 4.3 Gain on disposal of associated companies Ð (37.9) Loss on dilution of interest in an associated company Ð 5.8 Gain on redemption of convertible bonds of a subsidiary Ð (22.0) Provision for diminution in value of an unlisted investment 26.2 Ð Provision for guarantees issued to disposed subsidiaries 5.5 Ð Provision for receivable from an associated company 25.6 Ð Accounts receivable write off 15.6 3.9 Gain on disposal of unlisted investments (3.2) Ð Loss on disposal of long term listed investment 0.1 Ð Decrease/(increase) in accounts receivable and prepayments 216.2 (255.0) Decrease in inventories 54.6 55.2 Increase/(decrease) in accounts payable and accruals (317.2) 164.4 Increase in pension obligations 0.5 19.7

Net cash inflow from operating activities $ 19.3 $ 78.6

Ð 228 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

(b) Analysis of changes in financing during the years

Share Short capital term Long (including bank term premium, loans bank contributed with loans surplus, Convertible maturity and capital and debentures over finance redemption of three lease Minority reserve) subsidiaries months payables interest

At 1 February 1997 $ 604.0 $ 51.8 $ 271.5 $ 419.8 $ 241.0

Cash inflow/(outflow) from financing - net 16.8 14.5 (67.4) (87.4) Ð Scrip dividends 24.5 ÐÐÐÐ Issuable equity securities (12.4) ÐÐÐÐ Inception of finance leases Ð Ð Ð 0.8 Ð Disposal of subsidiaries Ð (23.8) Ð (6.8) (16.1) Minority share in earning for the year ÐÐÐÐ21.0 Conversion of convertible bonds Ð (13.3) Ð Ð 13.3 Dividends paid ÐÐÐÐ(0.4) Gain on redemption of convertible bonds Ð (22.0) Ð Ð Ð Exchange difference Ð (7.2) (3.0) (2.8) (0.2)

At 31 January 1998 and 1 February 1998 $ 632.9 $ - $ 201.1 $ 323.6 $ 258.6 Cash inflow/(outflow) from financing - net 5.2 7.0 (13.0) (87.6) Ð Inception of finance leases Ð Ð Ð 9.0 Ð Disposal of subsidiaries Ð Ð Ð (4.9) Ð Arising from partial divestment of interests in a subsidiary ÐÐÐÐ(5.0) Arising from acquisition of subsidiaries 6.6 ÐÐÐÐ Minority share in loss of the year ÐÐÐÐ(25.9) Dividends paid ÐÐÐÐ(1.0) Issuance of shares of a subsidiary ÐÐÐÐ(11.4) Exchange difference Ð Ð 3.3 2.8 (3.8)

At 31 January 1999 $ 644.7 $ 7.0 $ 191.4 $ 242.9 $ 211.5

Ð 229 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

1999 1998

Net assets acquired: Unlisted investment, at cost $ 127.1 $ Ð Minority interests (49.0) Ð

$ 78.1 $ Ð

Satisfied by: Cash paid during the year $ 38.3 $ Ð Cash paid in prior year 39.8 Ð

$ 78.1 $ Ð

The analysis of net outflow of cash and cash equivalents in respect of the acquisition of a subsidiary is as follows:

1999 1998

Cash consideration paid during the year $ 38.3 $ Ð

The subsidiary acquired during the year contributed $Nil for net operating cash flows, paid $Nil in respect of the net returns on investments and servicing of finance, paid $Nil in respect of taxation, utilised $Nil for investing activities and utilised $Nil for financing activities.

The turnover and the consolidated profit/(loss) after taxation include the turnover of $Nil and the attributable gain of $Nil relating to the subsidiary acquired during the year.

(d) Analysis of the acquisition of interests in an associated company

1999 1998

Share of net assets acquired: Unlisted investment, at cost $ 38.8 $ Ð

Satisfied by: Cash $ 38.8 $ Ð

The analysis of net outflow of cash and cash equivalents in respect of the acquisition of interests in an associated company is as follows:

1999 1998

Cash consideration $ 38.8 $ Ð

Ð 230 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

(e) Analysis of the disposal of subsidiaries

1999 1998

Net assets disposed of: Fixed assets $ 4.6 $ 103.8 Other assets 9.0 95.1 Goodwill 1.6 45.8 Cash and bank balances 0.4 5.6 Interest in associated companies Ð 6.1 Accounts receivable and prepayments 16.2 176.3 Inventories 8.1 144.6 Bank loans and overdrafts (7.5) (112.3) Accounts payable and accruals (37.3) (145.1) Taxation Ð (1.7) Long term bank loans (4.9) (6.8) Convertible bonds Ð (23.8) Pension obligations (3.7) (110.5) Minority interests Ð (16.1) Currency translation reserve 1.0 9.6

(12.5) 170.6 Loss on disposal of subsidiaries Ð (4.3)

$ (12.5) $ 166.3

Satisfied by: Cash received $ Ð $ 91.3 Cash paid (12.5) Ð

Unlisted overseas investments Ð 75.0

$ (12.5) $ 166.3

The analysis of net inflow/(outflow) of cash and cash equivalents in respect of the disposal of subsidiaries is as follows:

1999 1998

Cash consideration received/(paid) $ (12.5) $ 91.3 Bank loans and overdrafts disposed of 7.5 112.3 Cash and bank balances disposed of (0.4) (5.6)

Net inflow/(outflow) of cash and cash equivalents $ (5.4) $ 198.0

During the year, the Group entered into a sale and purchase agreement (the “Agreement”) for the disposal of certain subsidiaries. Under the Agreement, the Group was granted an option by the purchaser of the subsidiaries, for a period of three years from the date of the Agreement, to repurchase the subsidiaries disposed of from the purchaser at a price equivalent to 80 % of the value of such subsidiaries as determined by a valuation to be performed by an independent professional valuer as of the time the Group decides to exercise such option.

The subsidiaries sold during the year contributed $Nil (1998: $39.1) for net operating cash flows, paid $Nil (1998: $9.3) in respect of the net returns on investments and servicing of finance, paid $Nil (1998: $2.4) in respect of taxation, contributed $Nil (1998: $1.3) for investing activities and utilised $Nil (1998: $13.6) for financing activities.

The turnover and the net profit/(loss) attributable to shareholders include the turnover of $Nil (1998: $408.4) and the attributable gain of $Nil (1998: $1.9) relating to the subsidiaries prior to their disposal during the year.

Ð 231 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

(f) Exceptional items

There was a net cash outflow in respect of the disposal of unlisted investments and in the reorganisation and relocation expenses attributable to the Group of $6.0 (1998: cash inflow of $147.1).

(g) Major non-cash transaction

During the year, the Group entered into finance lease arrangements in respect of assets with a total capital value at the inception of the leases of $9.0 (1998: $0.8).

27. SUBSEQUENT EVENTS

On 11 January 1999, the Company announced its subscription of 40,000,000 new shares in Akai Electric Co., Ltd. (“Akai”) at a price of Yen 86 each for an aggregate consideration of approximately $31.1. The subscription was completed on 4 February 1999. After the subscription, the Company’s shareholding in Akai increased to 74.4%.

On 15 March 1999, the Debentures in the amount of $7.0 as set out in note 20 to the financial statements, were converted, together with the subsequent exercise of warrants, into an aggregate of 10,812,000 Akai Shares. Accordingly, the Company’s shareholding in Akai decreased from 74.4% to 71.2%.

On 13 April 1999, Tomei entered into a subscription agreement with The Grande Holdings Limited (“Grande”) involving the subscription by Grande of 1,000,000,000 new shares of HK$0.01 per share (“Subscription”) of Tomei. The subscription price of HK$0.10 per share represented a discount of approximately 15.3% to the closing price of HK$0.118 per share on 13 April 1999. The cash proceeds from the Subscription of $12.8 will be used as general working capital of the Tomei group. Upon completion of the Subscription, Grande holds approximately 31.8% of Tomei’s enlarged issued share capital and the Company’s effective interest in Tomei has been reduced to 24.1%. New directors as nominated by Grande have been appointed to the board of directors of Tomei on 27 May 1999, which constitute the majority of the members of the board of directors of Tomei. The Subscription was completed on 27 May 1999. Upon completion of the Subscription, the name of Tomei was changed to “Toyo Holdings Limited”.

On 16 April 1999, the Company announced its subscription of 40,000,000 new shares in Akai at a price of Yen 96 each for an aggregate consideration of approximately $32.3. The subscription was completed on 10 May 1999. After the subscription, the Company’s shareholding in Akai increased to 74.4%.

Ð 232 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

28. PARTICULARS OF PRINCIPAL SUBSIDIARIES

Particulars of the Company’s principal subsidiaries at 31 January 1999 are set out below.

Place of Effective incorporation/ percentage registration Class of of Issued Nature of Name and operations holding holding share capital business

Held directly

Akai Electric Japan Ordinary 71 Yen 27,851 Manufacture Co., Ltd. million and distribution of audio and visual products

Semi-Tech British Ordinary 100 US$1 Investment (Europe) Ltd. Virgin holding Island

Held indirectly

Akai Pty. Ltd. Australia Ordinary 71 A$7,600,000 Distribution of audio and visual products

Akai (U.K.) Ltd. U.K. Ordinary 71 GBP4,151,000 Distribution of audio and visual products

Akai Deutschland Germany Ordinary 71 DM7,400,000 Distribution GmbH of audio and visual products

Akai France France Ordinary 71 FF42 million Distribution S.A. of audio and visual products

Akai Electric Thailand Ordinary 57 Baht 120 Manufacture of (Thailand) Co. million audio and Ltd. visual products

Kong Wah Hong Kong Ordinary 71 HK$53 million Manufacture Electronic and distribution Enterprises of consumer Limited electronic products

Kong Wah Estate Hong Kong Ordinary 71 HK$30 million Investment Ltd. holding

Merrywide Hong Kong Ordinary 51 HK$100 Investment Ltd. holding

Ð 233 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

Place of Effective incorporation/ percentage registration Class of of Issued Nature of Name and operations holding holding share capital business

Held indirectly (continued)

Onwa U.K Ordinary 71 GBP 7 million Manufacture and Electronics distribution of (U.K.) Ltd. visual products

Persicus B.V. Netherlands Ordinary 71 NLG 40,000 Investment holding

Semi-Tech Finland Ordinary 100 FIM 1,015,000 Sale of (Finland) Oy visual products

Semi-Tech Finland Ordinary 100 FIM 25,015,000 Manufacture of (Turku) Oy visual products

Zhongshan Kawa PRC Ordinary 53 HK$62,771,000 Manufacture of Electronic audio and Group., Ltd. visual products

Zhongshan Kawa PRC Ordinary 71 HK$27,900,000 Design and Electronic development of Research & audio, visual and Development telecom- Centre munications products

The above table lists the subsidiaries of the Company as at 31 January 1999 which, in the opinion of the directors, either principally affected the results for the year, or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

29. COMPARATIVE AMOUNTS

Certain comparative amounts have been reclassified to conform with the current year’s presentation.

30. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved by the board of directors on 26 June 1999.

Ð 234 Ð APPENDIX V INFORMATION ON AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION) AND ITS SUBSIDIARIES

STATEMENT OF AFFAIRS

The Statement of Affairs executed by one of the Akai Directors as at 23 August 2000, being the date of commencement of the liquidation of Akai, is set out below: Original Cost as at Estimated 23 August 2000 Realisable Value US$ US$

Assets (Note 1) Bank Balance and Cash 135,624 135,624 Investments in stocks or shares 321,655,346 0 Land and Buildings 839,668 0 Investment in land interest 57,000,000 0 Others (Note 2) 881,903 32,051 Debts due to Akai 282,559,763 0

Estimated amount available to preferential creditors subject to cost of liquidation 663,072,301 167,675

Liabilities (Note 3) Preferential Creditors Employees (27,281) Estimated amount available to ordinary 140,394 creditors subject to cost of liquidation

Ordinary Creditors Amounts due to banks (12,698,174) Accounts payable (17,493,671) Amounts due to subsidiaries/associated companies (267,122,215)

Total ordinary creditors (297,314,060)

Contingent Liabilities (462,072,282)

Estimated deficiency to creditors (759,245,948) Issued Share Capital Fully paid (28,155,267)

Total Deficiency before the cost of Liquidation (787,401,215)

Notes:

1. Please refer to the financial statements of the Akai Group for the year ended 31 January 1999 as set out on page 205 to page 234 of this document for details of the assets of Akai.

2. The other assets of Akai comprise of (a) software costs capitalised since 1996 of US$272,458; (b) deposits paid of US$568,419; and (c) debenture (Discovery Bay Club) of US$41,026.

3. Please refer to the financial statements of the Akai Group for the year ended 31 January 1999 as set out on page 205 to page 234 of this document and the paragraph headed “Indebtedness” set out on page 204 of this document for details of the liabilities of Akai.

4. In December 1999, certain assets of Akai were charged to Tremendous Springs Limited. The assets charged to Tremendous Springs Limited included Akai’s accounts receivable and Akai’s interest in various investments and securities. Aspects of the charges are the subject of litigation in Hong Kong. In light of the uncertainty associated of the outcome of this litigation, the Liquidators are unable to quantify what effect these charges will have on the realisations that would otherwise be available to the creditors of Akai. Ð 235 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

Set out below is a summary of certain provisions of the memorandum of association (the “Memorandum of Association”) and bye-laws (the “Bye-laws”) of Hang Ten and of certain aspects of Bermuda company law. For the purposes of this appendix only, the expression “the Company” when used below shall mean “Hang Ten”.

1. MEMORANDUM OF ASSOCIATION

The Memorandum of Association states, inter alia, that the liability of members of the Company is limited to the amount, if any, for the time being unpaid on the Hang Ten Shares respectively held by them and that the Company is an exempted company as defined in the Companies Act. The Memorandum of Association also sets out the objects for which the Company was formed, including acting as a holding and investment company, and its powers, including the powers set out in the First Schedule to the Companies Act, excluding paragraph 8 thereof. As an exempted company, the Company will be carrying on business outside Bermuda from a place of business within Bermuda.

In accordance with and subject to section 42A of the Companies Act, the Memorandum of Association empowers the Company to purchase its own shares and pursuant to its Bye-laws, this power is exercisable by the board of Directors (the “board”) upon such terms and subject to such conditions as it thinks fit.

2. BYE-LAWS

The Bye-laws were adopted on 24 October 2002. The following is a summary of certain provisions of the Bye-laws:

(a) Directors

(i) Power to allot and issue shares and warrants

Subject to any special rights conferred on the holders of any shares or class of shares, any share may be issued with or have attached thereto such rights, or such restrictions, whether with regard to dividend, voting, return of capital, or otherwise, as the Company may by ordinary resolution determine (or, in the absence of any such determination or so far as the same may not make specific provision, as the board may determine). Subject to the Companies Act, any preference shares may be issued or converted into shares that are liable to be redeemed, at a determinable date or at the option of the Company or, if so authorised by the Memorandum of Association, at the option of the holder, on such terms and in such manner as the Company before the issue or conversion may by ordinary resolution determine. The board may issue warrants conferring the right upon the holders thereof to subscribe for any class of shares or securities in the capital of the Company on such terms as it may from time to time determine.

Subject to the provisions of the Companies Act, the Bye-laws, any direction that may be given by the Company in general meeting and, where applicable, the rules of any Designated Stock Exchange (as defined in the Bye-laws) and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, all unissued

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shares in the Company shall be at the disposal of the board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for such consideration and on such terms and conditions as it in its absolute discretion thinks fit, but so that no shares shall be issued at a discount.

Neither the Company nor the board shall be obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to members or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the board, be unlawful or impracticable. Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.

(ii) Power to dispose of the assets of the Company or any of its subsidiaries

There are no specific provisions in the Bye-laws relating to the disposal of the assets of the Company or any of its subsidiaries.

Note: The Directors may, however, exercise all powers and do all acts and things which may be exercised or done or approved by the Company and which are not required by the Bye-laws or the Companies Act to be exercised or done by the Company in general meeting.

(iii) Compensation or payments for loss of office

Payments to any Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from office (not being a payment to which the Director is contractually entitled) must be approved by the Company in general meeting.

(iv) Loans and provision of security for loans to Directors

There are no provisions in the Bye-laws relating to the making of loans to Directors. However, the Companies Act contains restrictions on companies making loans or providing security for loans to their directors, the relevant provisions of which are summarised in the paragraph headed “Bermuda Company Law” in this Appendix.

(v) Financial assistance to purchase shares of the Company

Neither the Company nor any of its subsidiaries shall directly or indirectly give financial assistance to a person who is acquiring or proposing to acquire shares in the Company for the purpose of that acquisition whether before or at the same time as the acquisition takes place or afterwards, provided that the Bye-laws shall not prohibit transactions permitted under the Companies Act.

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(vi) Disclosure of interests in contracts with the Company or any of its subsidiaries

A Director may hold any other office or place of profit with the Company (except that of auditor of the Company) in conjunction with his office of Director for such period and, subject to the Companies Act, upon such terms as the board may determine, and may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) in addition to any remuneration provided for by or pursuant to any other Bye- laws. A Director may be or become a director or other officer of, or a member of, any company promoted by the Company or any other company in which the Company may be interested, and shall not be liable to account to the Company or the members for any remuneration, profits or other benefits received by him as a director, officer or member of, or from his interest in, such other company. Subject as otherwise provided by the Bye-laws, the board may also cause the voting power conferred by the shares in any other company held or owned by the Company to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company.

Subject to the Companies Act and to the Bye-laws, no Director or proposed or intending Director shall be disqualified by his office from contracting with the Company, either with regard to his tenure of any office or place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company or the members for any remuneration, profit or other benefits realised by any such contract or arrangement by reason of such Director holding that office or the fiduciary relationship thereby established. A Director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the Company shall declare the nature of his interest at the meeting of the board at which the question of entering into the contract or arrangement is first taken into consideration, if he knows his interest then exists, or in any other case, at the first meeting of the board after he knows that he is or has become so interested.

A Director shall not vote (nor be counted in the quorum) on any resolution of the board in respect of any contract or arrangement or other proposal in which he is to his knowledge materially interested but this prohibition shall not apply to any of the following matters, namely:

(aa) any contract or arrangement for giving of any security or indemnity to the Director in respect of money lent or obligations incurred or undertaken by him at the request of or for the benefit of the Company or any of its subsidiaries;

(bb) any contract or arrangement for the giving by the Company of any security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director has himself assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;

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(cc) any contract or arrangement concerning an offer of shares or debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase, where the Director is or is to be interested as a participant in the underwriting or sub-underwriting of the offer;

(dd) any contract or arrangement in which the Director is interested in the same manner as other holders of shares or debentures or other securities of the Company or any of its subsidiaries by virtue only of his interest in shares or debentures or other securities of the Company;

(ee) any contract or arrangement concerning any other company in which he is interested only, whether directly or indirectly, as an officer or executive or a shareholder other than a company in which the Director together with any of his associates (as defined by the rules, where applicable, of any Designated Stock Exchange (as defined in the Bye-laws)) is beneficially interested in 5 per cent. or more of the issued shares or of the voting rights of any class of shares of such company (or of any third company through which his interest is derived); or

(ff) any proposal concerning the adoption, modification or operation of a share option scheme, a pension fund or retirement, death, or disability benefits scheme or other arrangement which relates both to Directors and employees of the Company or of any of its subsidiaries and does not provide in respect of any Director as such any privilege or advantage not accorded to the employees to which such scheme or fund relates.

(vii) Remuneration

The ordinary remuneration of the Directors shall from time to time be determined by the Company in general meeting, such remuneration (unless otherwise directed by the resolution by which it is voted) to be divided amongst the Directors in such proportions and in such manner as the board may agree or, failing agreement, equally, except that any Director holding office for part only of the period in respect of which the remuneration is payable shall only rank in such division in proportion to the time during such period for which he held office. The Directors shall also be entitled to be prepaid or repaid all travelling, hotel and incidental expenses reasonably incurred or expected to be incurred by them in attending any board meetings, committee meetings or general meetings or separate meetings of any class of shares or of debentures of the Company or otherwise in connection with the discharge of their duties as Directors.

Any Director who, by request, goes or resides abroad for any purpose of the Company or who performs services which in the opinion of the board go beyond the ordinary duties of a Director may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration provided for by or

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pursuant to any other Bye-law. A Director appointed to be a managing director, joint managing director, deputy managing director or other executive officer shall receive such remuneration (whether by way of salary, commission or participation in profits or otherwise or by all or any of those modes) and such other benefits (including pension and/or gratuity and/or other benefits on retirement) and allowances as the board may from time to time decide. Such remuneration may be either in addition to or in lieu of his remuneration as a Director.

The board may establish or concur or join with other companies (being subsidiary companies of the Company or companies with which it is associated in business) in establishing and making contributions out of the Company’s monies to any schemes or funds for providing pensions, sickness or compassionate allowances, life assurance or other benefits for employees (which expression as used in this and the following paragraph shall include any Director or ex-Director who may hold or have held any executive office or any office of profit with the Company or any of its subsidiaries) and ex-employees of the Company and their dependants or any class or classes of such persons.

The board may pay, enter into agreements to pay or make grants of revocable or irrevocable, and either subject or not subject to any terms or conditions, pensions or other benefits to employees and ex-employees and their dependants, or to any of such persons, including pensions or benefits additional to those, if any, to which such employees or ex- employees or their dependants are or may become entitled under any such scheme or fund as is mentioned in the previous paragraph. Any such pension or benefit may, as the board considers desirable, be granted to an employee either before and in anticipation of, or upon or at any time after, his actual retirement.

(viii) Retirement, appointment and removal

At each annual general meeting, one third of the Directors for the time being (or if their number is not a multiple of three, then the number nearest to but not greater than one third) will retire from office by rotation provided that no Director holding office as chairman and/or managing director shall be subject to retirement by rotation, or be taken into account in determining the number of Directors to retire. The Directors to retire in every year will be those who have been longest in office since their last re-election or appointment but as between persons who became or were last re-elected Directors on the same day those to retire will (unless they otherwise agree among themselves) be determined by lot.

Note: There are no provisions relating to retirement of Directors upon reaching any age limit.

The Directors shall have the power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy on the board or, subject to authorisation by the members in general meeting, as an addition to the existing board but so that the number of Directors so appointed shall not exceed any maximum number determined from time to time by the members in general meeting. Any Director so appointed shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election at the meeting. Neither a Director nor an alternate Director is required to hold any shares in the Company by way of qualification. Ð 240 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

A Director may be removed by a special resolution of the Company before the expiration of his period of office (but without prejudice to any claim which such Director may have for damages for any breach of any contract between him and the Company) provided that the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention to do so and be served on such Director 14 days before the meeting and, at such meeting, such Director shall be entitled to be heard on the motion for his removal. Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than two. There is no maximum number of Directors unless otherwise determined from time to time by members of the Company.

The board may from time to time appoint one or more of its body to be managing director, joint managing director, or deputy managing director or to hold any other employment or executive office with the Company for such period (subject to their continuance as Directors) and upon such terms as the board may determine and the board may revoke or terminate any of such appointments (but without prejudice to any claim for damages that such Director may have against the Company or vice versa). The board may delegate any of its powers, authorities and discretions to committees consisting of such Director or Directors and other persons as the board thinks fit, and it may from time to time revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part, and either as to persons or purposes, but every committee so formed shall, in the exercise of the powers, authorities and discretions so delegated, conform to any regulations that may from time to time be imposed upon it by the board.

(ix) Borrowing powers

The board may from time to time at its discretion exercise all the powers of the Company to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company and, subject to the Companies Act, to issue debentures, bonds and other securities of the Company, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

Note: These provisions, in common with the Bye-laws in general, can be varied with the sanction of a special resolution of the Company.

(b) Alterations to constitutional documents

The Bye-laws may be rescinded, altered or amended by the Directors subject to the confirmation of the Company in general meeting. The Bye-laws state that a special resolution shall be required to alter the provisions of the Memorandum of Association, to confirm any such rescission, alteration or amendment to the Bye-laws or to change the name of the Company.

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The Company may from time to time by ordinary resolution in accordance with the relevant provisions of the Companies Act:

(i) increase its capital by such sum, to be divided into shares of such amounts as the resolution shall prescribe;

(ii) consolidate and divide all or any of its capital into shares of larger amount than its existing shares;

(iii) divide its shares into several classes and without prejudice to any special rights previously conferred on the holders of existing shares as the directors may determine;

(iv) sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum of Association;

(v) change the currency denomination of its share capital;

(vi) make provision for the issue and allotment of shares which do not carry any voting rights; and

(vii) cancel any shares which, at the date of passing of the resolution, have not been taken, or agreed to be taken, by any person, and diminish the amount of its capital by the amount of the shares so cancelled.

The Company may, by special resolution, subject to any confirmation or consent required by law, reduce its authorised or issued share capital or any share premium account or other undistributable reserve in any manner permitted by law.

(d) Variation of rights of existing shares or classes of shares

Subject to the Companies Act, all or any of the special rights attached to the shares or any class of shares may (unless otherwise provided for by the terms of issue of that class) be varied, modified or abrogated either with the consent in writing of the holders of not less than three- fourths of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. To every such separate general meeting the provisions of the Bye-laws relating to general meetings will mutatis mutandis apply, but so that the necessary quorum (other than at an adjourned meeting) shall be two persons (or in the case of a member being a corporation, its duly authorised representative) holding or representing by proxy not less than one-third in nominal value of the issued shares of that class and at any adjourned meeting two holders present in person (or in the case of a member being a corporation, its duly authorised representative) or by proxy whatever the number of shares held by them shall be a quorum. Every holder of shares of the class shall be entitled on a poll to one vote for every such share held by him, and any holder of shares of the class present in person or by proxy may demand a poll. Ð 242 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

(e) Special resolution-majority required

A special resolution of the Company must be passed by a majority of not less than three- fourths of the votes cast by such members as, being entitled so to do, vote in person or, in the case of such members as are corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which not less than 21 clear days’ notice, specifying the intention to propose the resolution as a special resolution, has been duly given. Provided that, except in the case of an annual general meeting, if it is so agreed by a majority in number of the members having a right to attend and vote at such meeting, being a majority together holding not less than 95 per cent. in nominal value of the shares giving that right and, in the case of an annual general meeting, if so agreed by all members entitled to attend and vote thereat, a resolution may be proposed and passed as a special resolution at a meeting of which less than 21 clear days’ notice has been given.

(f) Voting rights (generally and on a poll) and right to demand a poll

Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in accordance with the Bye-laws, at any general meeting on a show of hands, every member who is present in person (or being a corporation, is present by its duly authorised representative) or by proxy shall have one vote and on a poll every member present in person or by proxy or, being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or installments is treated for the foregoing purposes as paid up on the share.

Notwithstanding anything contained in the Bye-laws, where more than one proxy is appointed by a member which is a clearing house (as defined in the Bye-laws) (or its nominee(s)), each such proxy shall have one vote on a show of hands. On a poll, a member entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

At any general meeting a resolution put to the vote of the meeting is to be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by (i) the chairman of the meeting or (ii) at least three members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy for the time being entitled to vote at the meeting or (iii) any member or members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting or (iv) a member or members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

If a recognised clearing house (or its nominee(s)) is a member of the Company it may authorise such persons as it thinks fit to act as its representative(s) at any meeting of the Company or at any meeting of any class of members of the Company provided that, if more than one person Ð 243 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

is so authorised, the authorisation shall specify the number and class of shares in respect of which each such person is so authorised. A person authorised pursuant to this provision shall be entitled to exercise the same powers on behalf of the recognised clearing house (or its nominee(s)) as if such person was the registered holder of the shares held by that clearing house (or its nominee(s)) in respect of the number and class of shares specified in the relevant authorisation including the right to vote individually on a show of hands.

(g) Requirements for annual general meetings

An annual general meeting of the Company must be held in each year other than the year in which its statutory meeting is convened at such time (within a period of not more than 15 months after the holding of the last preceding annual general meeting unless a longer period would not infringe the rules of any Designated Stock Exchange (as defined in the Bye-laws)) and place as may be determined by the board.

(h) Accounts and audit

The board shall cause true accounts to be kept of the sums of money received and expended by the Company, and the matters in respect of which such receipt and expenditure take place, and of the property, assets, credits and liabilities of the Company and of all other matters required by the provisions of the Companies Act or necessary to give a true and fair view of the Company’s affairs and to explain its transactions.

The accounting records shall be kept at the registered office or, subject to the Companies Act, at such other place or places as the board decides and shall always be open to inspection by any Director. No member (other than a Director) shall have any right of inspecting any accounting record or book or document of the Company except as conferred by law or authorised by the board or the Company in general meeting.

Subject to the Companies Act, a printed copy of the Directors’ report, accompanied by the balance sheet and profit and loss account, including every document required by law to be annexed thereto, made up to the end of the applicable financial year and containing a summary of the assets and liabilities of the Company under convenient heads and a statement of income and expenditure, together with a copy of the auditors’ report, shall be sent to each person entitled thereto at least 21 days before the date of the general meeting and laid before the Company in general meeting in accordance with the requirements of the Companies Act provided that this provision shall not require a copy of those documents to be sent to any person whose address the Company is not aware or to more than one of the joint holders of any shares or debentures; however, to the extent permitted by and subject to compliance with all applicable laws, including the rules of the Designated Stock Exchange (as defined in the Bye-laws), the Company may send to such persons a summary financial statement derived from the Company’s annual accounts and the directors’ report instead provided that any such person may by notice in writing served on the Company, demand that the Company sends to him, in addition to a summary financial statement, a complete printed copy of the Company’s annual financial statement and the directors’ report thereon.

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Subject to the Companies Act, at the annual general meeting or at a subsequent special general meeting in each year, the members shall appoint an auditor to audit the accounts of the Company and such auditor shall hold office until the members appoint another auditor. Such auditor may be a member but no Director or officer or employee of the Company shall, during his continuance in office, be eligible to act as an auditor of the Company. The remuneration of the auditor shall be fixed by the Company in general meeting or in such manner as the members may determine.

The financial statements of the Company shall be audited by the auditor in accordance with generally accepted auditing standards. The auditor shall make a written report thereon in accordance with generally accepted auditing standards and the report of the auditor shall be submitted to the members in general meeting. The generally accepted auditing standards referred to herein may be those of a country or jurisdiction other than Bermuda. If the auditing standards of a country or jurisdiction other than Bermuda are used, the financial statements and the report of the auditor should disclose this fact and name such country and jurisdiction.

(i) Notices of meetings and business to be conducted thereat

An annual general meeting and any special general meeting at which it is proposed to pass a special resolution shall (save as set out in sub-paragraph (e) above) be called by at least 21 clear days’ notice in writing, and any other special general meeting shall be called by at least 14 clear days’ notice (in each case exclusive of the day on which the notice is given or deemed to be given and of the day for which it is given or on which it is to take effect). The notice must specify the time and place of the meeting and, in the case of special business, the general nature of that business. The notice convening an annual general meeting shall specify the meeting as such.

(j) Transfer of shares

All transfers of shares may be effected by an instrument of transfer in the usual or common form or in a form prescribed by the Designated Stock Exchange or in such other form as the board may approve and which may be under hand or, if the transferor or transferee is a clearing house or its nominee(s), by hand or by machine imprinted signature or by such other manner of execution as the board may approve from time to time. The instrument of transfer shall be executed by or on behalf of the transferor and the transferee provided that the board may dispense with the execution of the instrument of transfer by the transferee in any case in which it thinks fit, in its discretion, to do so and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect thereof. The board may also resolve either generally or in any particular case, upon request by either the transferor or the transferee, to accept mechanically executed transfers.

The board in so far as permitted by any applicable law may, in its absolute discretion, at any time and from time to time transfer any share upon the principal register to any branch register or any share on any branch register to the principal register or any other branch register.

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Unless the board otherwise agrees, no shares on the principal register shall be transferred to any branch register nor may shares on any branch register be transferred to the principal register or any other branch register. All transfers and other documents of title shall be lodged for registration and registered, in the case of shares on a branch register, at the relevant registration office and, in the case of shares on the principal register, at the registered office in Bermuda or such other place in Bermuda at which the principal register is kept in accordance with the Companies Act.

The board may, in its absolute discretion, and without assigning any reason, refuse to register a transfer of any share (not being a fully paid up share) to a person of whom it does not approve or any share issued under any share incentive scheme for employees upon which a restriction on transfer imposed thereby still subsists, and it may also refuse to register any transfer of any share to more than four joint holders or any transfer of any share (not being a fully paid up share) on which the Company has a lien.

The board may decline to recognise any instrument of transfer unless a fee of such maximum sum as any Designated Stock Exchange (as defined in the Bye-laws) may determine to be payable or such lesser sum as the Directors may from time to time require is paid to the Company in respect thereof, the instrument of transfer, if applicable, is properly stamped, is in respect of only one class of share and is lodged at the relevant registration office or registered office or such other place at which the principal register is kept accompanied by the relevant share certificate(s) and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do).

The registration of transfers may be suspended and the register closed on giving notice by advertisement in an appointed newspaper and, where applicable, any other newspapers in accordance with the requirements of any Designated Stock Exchange (as defined in the Bye-laws), at such times and for such periods as the board may determine and either generally or in respect of any class of shares. The register of members shall not be closed for periods exceeding in the whole 30 days in any year.

(k) Power for the Company to purchase its own shares

The Bye-laws supplement the Company’s Memorandum of Association (which gives the Company the power to purchase its own shares) by providing that the power is exercisable by the board upon such terms and conditions as it thinks fit.

(l) Power for any subsidiary of the Company to own shares in the Company

There are no provisions in the Bye-laws relating to ownership of shares in the Company by a subsidiary.

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(m) Dividends and other methods of distribution

Subject to the Companies Act, the Company in general meeting may declare dividends in any currency to be paid to the members but no dividend shall be declared in excess of the amount recommended by the board. The Company in general meeting may also make a distribution to its members out of contributed surplus (as ascertained in accordance with the Companies Act). No dividend shall be paid or distribution made out of contributed surplus if to do so would render the Company unable to pay its liabilities as they become due or the realisable value of its assets would thereby become less than the aggregate of its liabilities and its issued share capital and share premium account.

Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise provide, (i) all dividends shall be declared and paid according to the amounts paid up on the shares in respect whereof the dividend is paid but no amount paid up on a share in advance of calls shall for this purpose be treated as paid up on the share and (ii) all dividends shall be apportioned and paid pro rata according to the amount paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. The Directors may deduct from any dividend or other monies payable to a member by the Company on or in respect of any shares all sums of money (if any) presently payable by him to the Company on account of calls or otherwise.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared on the share capital of the Company, the board may further resolve either (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment, or (b) that shareholders entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the board may think fit. The Company may also upon the recommendation of the board by an ordinary resolution resolve in respect of any one particular dividend of the Company that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared the board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind.

All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise made use of by the board for the benefit of the Company until claimed and the Company shall not be constituted a trustee in respect thereof. All dividends or bonuses unclaimed for six years after having been declared may be forfeited by the board and shall revert to the Company.

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(n) Proxies

Any member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a member of the Company. In addition, a proxy or proxies representing either a member who is an individual or a member which is a corporation shall be entitled to exercise the same powers on behalf of the member which he or they represent as such member could exercise.

(o) Call on shares and forfeiture of shares

Subject to the Bye-laws and to the terms of allotment, the board may from time to time make such calls upon the members in respect of any monies unpaid on the shares held by them respectively (whether on account of the nominal value of the shares or by way of premium). A call may be made payable either in one lump sum or by installments. If the sum payable in respect of any call or instalment is not paid on or before the day appointed for payment thereof, the person or persons from whom the sum is due shall pay interest on the same at such rate not exceeding 20 per cent. per annum as the board may agree to accept from the day appointed for the payment thereof to the time of actual payment, but the board may waive payment of such interest wholly or in part. The board may, if it thinks fit, receive from any member willing to advance the same, either in money or money’s worth, all or any part of the monies uncalled and unpaid or installments payable upon any shares held by him, and upon all or any of the monies so advanced the Company may pay interest at such rate (if any) as the board may decide.

If a member fails to pay any call on the day appointed for payment thereof, the board may serve not less than 14 clear days’ notice on him requiring payment of so much of the call as is unpaid, together with any interest which may have accrued and which may still accrue up to the date of actual payment and stating that, in the event of non-payment at or before the time appointed, the shares in respect of which the call was made will be liable to be forfeited.

If the requirements of any such notice are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the board to that effect.

Such forfeiture will include all dividends and bonuses declared in respect of the forfeited share and not actually paid before the forfeiture.

A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall, notwithstanding, remain liable to pay to the Company all monies which, at the date of forfeiture, were payable by him to the Company in respect of the shares, together with (if the board shall in its discretion so require) interest thereon from the date of forfeiture until the date of actual payment at such rate not exceeding 20 per cent. per annum as the board determines.

Ð 248 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

(p) Inspection of register of members

The register and branch register of members shall be open to inspection between 10:00 a.m. and 12:00 noon on every business day by members without charge, or by any other person upon a maximum payment of five Bermuda dollars, at the registered office or such other place in Bermuda at which the register is kept in accordance with the Companies Act or, upon a maximum payment of $10, at the Registration Office (as defined in the Bye-laws), unless the register is closed in accordance with the Companies Act.

(q) Quorum for meetings and separate class meetings

For all purposes the quorum for a general meeting shall be two members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy and entitled to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to sanction the modification of class rights the necessary quorum shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class.

(r) Rights of the minorities in relation to fraud or oppression

There are no provisions in the Bye-laws relating to rights of minority shareholders in relation to fraud or oppression. However, certain remedies are available to shareholders of the Company under Bermuda law, as summarised in paragraph 4(e) of this Appendix.

(s) Procedures on liquidation

A resolution that the Company be wound up by the court or be wound up voluntarily shall be a special resolution.

If the Company shall be wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other sanction required by the Companies Act, divide among the members in specie or kind the whole or any part of the assets of the Company whether the assets shall consist of property of one kind or shall consist of properties of different kinds and the liquidator may, for such purpose, set such value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the liquidator, with the like authority, shall think fit, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

Ð 249 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

(t) Untraceable members

The Company may sell any of the shares of a member who is untraceable if (i) all cheques or warrants (being not less than three in total number) for any sum payable in cash to the holder of such shares have remained uncashed for a period of 12 years; (ii) upon the expiry of the 12 year period, the Company has not during that time received any indication of the existence of the member; and (iii) the Company has caused an advertisement to be published in accordance with the rules of the Designated Stock Exchange (as defined in the Bye-laws) giving notice of its intention to sell such shares and a period of three months, or such shorter period as may be permitted by the Designated Stock Exchange (as defined in the Bye-laws), has elapsed since such advertisement and the Designated Stock Exchange (as defined in the Bye-laws) has been notified of such intention. The net proceeds of any such sale shall belong to the Company and upon receipt by the Company of such net proceeds, it shall become indebted to the former member of the Company for an amount equal to such net proceeds.

(u) Other provisions

The Bye-laws provide that to the extent that it is not prohibited by and is in compliance with the Companies Act, if warrants to subscribe for shares have been issued by the Company and the Company does any act or engages in any transaction which would result in the subscription price of such warrants being reduced below the par value of a share, a subscription rights reserve shall be established and applied in paying up the difference between the subscription price and the par value of a share on any exercise of the warrants.

The Bye-laws also provide that the Company is required to maintain at its registered office a register of directors and officers in accordance with the provisions of the Companies Act and such register is open to inspection by members of the public without charge between 10:00 a.m. and 12:00 noon on every business day.

3. VARIATION OF MEMORANDUM OF ASSOCIATION AND BYE-LAWS

The Memorandum of Association may be altered by the Company in general meeting. In certain circumstances, consent to the alteration must be obtained from the Minister of Finance of Bermuda. The Bye-laws may be amended by the Directors subject to the confirmation of the Company in general meeting. The Bye-laws state that a special resolution shall be required to alter the provisions of the Memorandum of Association or to confirm any amendment to the Bye-laws or to change the name of the Company. For these purposes, a resolution is a special resolution if it has been passed by a majority of not less than three-fourths of the votes cast by such members of the Company as, being entitled to do so, vote in person or, in the case of such members as are corporations, by their respective duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which not less than 21 clear days’ notice specifying the intention to propose the resolution as a special resolution has been duly given. Except in the case of an annual general meeting, the requirement of 21 clear days’ notice may be waived by a majority in number of the members having the right to attend and vote at the relevant meeting, being a majority together holding not less than 95 per cent in nominal value of the shares giving that right.

Ð 250 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

4. BERMUDA COMPANY LAW

The Company is incorporated in Bermuda and, therefore, operates subject to Bermuda law. Set out below is a summary of certain provisions of Bermuda company law, although this does not purport to contain all applicable qualifications and exceptions or to be a complete review of all matters of Bermuda company law and taxation, which may differ from equivalent provisions in jurisdictions with which interested parties may be more familiar:

(a) Share capital

The Companies Act provides that where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called the “share premium account”, to which the provisions of the Companies Act relating to a reduction of share capital of a company shall apply as if the share premium account were paid up share capital of the company except that the share premium account may be applied by the company:

(i) in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares;

(ii) in writing off:

(aa) the preliminary expenses of the company; or

(bb) the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; or

(iii) in providing for the premiums payable on redemption of any shares or of any debentures of the company.

However, only premiums arising on the same class of shares can be used to pay up bonus shares or in providing for the premiums payable on redemption of shares referred to in (i) and (iii) above respectively.

In the case of an exchange of shares the excess value of the shares acquired over the nominal value of the shares being issued may be credited to a contributed surplus account of the issuing company.

The Companies Act permits a company to issue preference shares and subject to the conditions stipulated therein to convert those preference shares into redeemable preference shares.

The Companies Act includes certain protections for holders of special classes of shares, requiring their consent to be obtained before their rights may be varied. Where provision is made by the memorandum of association or bye-laws for authorising the variation of rights attached to any class of shares in the company, the consent of the specified proportions of the holders of the issued shares of that class or the sanction of a resolution passed at a separate meeting of the Ð 251 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

holders of those shares is required, and where no provision for varying such rights is made in the memorandum of association or bye-laws and nothing therein precludes a variation of such rights, the written consent of the holders of three-fourths of the issued shares of that class or the sanction of a resolution passed as aforesaid is required.

(b) Financial assistance to purchase shares of a company or its holding company

A company is prohibited from providing financial assistance for the purpose of an acquisition of its own or its holding company’s shares unless there are reasonable grounds for believing that the company is, and would after the giving of such financial assistance be, able to pay its liabilities as they become due. In certain circumstances, the prohibition from giving financial assistance may be excluded such as where the assistance is only an incidental part of a larger purpose or the assistance is of an insignificant amount such as the payment of minor costs. In addition, the Companies Act expressly permits the grant of financial assistance where (i) the financial assistance does not reduce the company’s net assets or, to the extent the net assets are reduced, such financial assistance is provided for out of funds of the company which would otherwise be available for dividend or distribution; (ii) an affidavit of solvency is sworn by the directors of the company; and (iii) the financial assistance is approved by resolution of shareholders of the company.

A company may, if authorised by its memorandum of association or bye-laws, purchase its own shares. Such purchases may only be effected out of the capital paid up on the purchased shares or out of the funds of the company otherwise available for dividend or distribution or out of the proceeds of a fresh issue of shares made for the purpose. Any premium payable on a purchase over the par value of the shares to be purchased must be provided for out of funds of the company otherwise available for dividend or distribution or out of the company’s share premium account. Any amount due to a shareholder on a purchase by a company of its own shares may (i) be paid in cash; (ii) be satisfied by the transfer of any part of the undertaking or property of the company having the same value; or (iii) be satisfied partly under (i) and partly under (ii). Any purchase by a company of its own shares may be authorised by its board of directors or otherwise by or in accordance with the provisions of its bye-laws. Such purchase may not be made if, on the date on which the purchase is to be effected, there are reasonable grounds for believing that the company is, or after the purchase would be, unable to pay its liabilities as they become due. The shares so purchased will be treated as cancelled and the company’s issued but not its authorised, capital will be diminished accordingly.

A company is not prohibited from purchasing and may purchase its own warrants subject to and in accordance with the terms and conditions of the relevant warrant instrument or certificate. There is no requirement under Bermuda law that a company’s memorandum of association or its bye-laws contain a specific provision enabling such purchases and the directors of a company may rely upon the general power contained in its memorandum of association to buy and sell and deal in personal property of all kinds.

Ð 252 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

Under Bermuda law, a subsidiary may hold shares in its holding company and in certain circumstances, may acquire such shares. The holding company is, however, prohibited from giving financial assistance for the purpose of the acquisition, subject to certain circumstances provided by the Companies Act. A company, whether a subsidiary or a holding company, may only purchase its own shares for cancellation if it is authorised to do so in its memorandum of association or bye- laws pursuant to section 42A of the Companies Act.

(d) Dividends and distributions

A company may not declare or pay a dividend, or make a distribution out of contributed surplus, if there are reasonable grounds for believing that (i) the company is, or would after the payment be, unable to pay its liabilities as they become due; or (ii) the realisable value of the company’s assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium accounts. Contributed surplus is defined for purposes of section 54 of the Companies Act to include the proceeds arising from donated shares, credits resulting from the redemption or conversion of shares at less than the amount set up as nominal capital and donations of cash and other assets to the company.

(e) Protection of minorities

Class actions and derivative actions are generally not available to shareholders under the laws of Bermuda. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong done to the company where the act complained of is alleged to be beyond the corporate power of the company or is illegal or would result in the violation of the company’s memorandum of association and bye-laws. Furthermore, consideration would be given by the court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s shareholders than actually approved it.

Any member of a company who complains that the affairs of the company are being conducted or have been conducted in a manner oppressive or prejudicial to the interests of some part of the members, including himself, may petition the court which may, if it is of the opinion that to wind up the company would unfairly prejudice that part of the members but that otherwise the facts would justify the making of a winding up order on just and equitable grounds, make such order as it thinks fit, whether for regulating the conduct of the company’s affairs in future or for the purchase of shares of any members of the company by other members of the company or by the company itself and in the case of a purchase by the company itself, for the reduction accordingly of the company’s capital, or otherwise. Bermuda law also provides that the company may be wound up by the Bermuda court, if the court is of the opinion that it is just and equitable to do so. Both these provisions are available to minority shareholders seeking relief from the oppressive conduct of the majority, and the court has wide discretion to make such orders as it thinks fit.

Except as mentioned above, claims against a company by its shareholders must be based on the general laws of contract or tort applicable in Bermuda.

Ð 253 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

A statutory right of action is conferred on subscribers of shares in a company against persons, including directors and officers, responsible for the issue of a document in respect of damage suffered by reason of an untrue statement therein, but this confers no right of action against the company itself. In addition, such company, as opposed to its shareholders, may take action against its officers including directors, for breach of their statutory and fiduciary duty to act honestly and in good faith with a view to the best interests of the company.

(f) Management

The Companies Act contains no specific restrictions on the power of directors to dispose of assets of a company, although it specifically requires that every officer of a company, which includes a director, managing director and secretary, in exercising his powers and discharging his duties must do so honestly and in good faith with a view to the best interests of the company and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Furthermore, the Companies Act requires that every officer should comply with the Companies Act, regulations passed pursuant to the Companies Act and the bye-laws of the company.

(g) Accounting and auditing requirements

The Companies Act requires a company to cause proper records of accounts to be kept with respect to (i) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (ii) all sales and purchases of goods by the company and (iii) the assets and liabilities of the company.

Furthermore, it requires that a company keeps its records of account at the registered office of the company or at such other place as the directors think fit and that such records shall at all times be open to inspection by the directors or the resident representative of the company. If the records of account are kept at some place outside Bermuda, there shall be kept at the office of the company in Bermuda such records as will enable the directors or the resident representative of the company to ascertain with reasonable accuracy the financial position of the company at the end of each three month period, except that where the company is listed on an appointed stock exchange, there shall be kept such records as will enable the directors or the resident representative of the company to ascertain with reasonable accuracy the financial position of the company at the end of each six month period.

The Companies Act requires that the directors of the company must, at least once a year, lay before the company in general meeting financial statements for the relevant accounting period. Further, the company’s auditor must audit the financial statements so as to enable him to report to the members. Based on the results of his audit, which must be made in accordance with generally accepted auditing standards, the auditor must then make a report to the members. The generally accepted auditing standards may be those of a country or jurisdiction other than Bermuda or such other generally accepted auditing standards as may be appointed by the Minister of Finance of Bermuda under the Companies Act; and where the generally accepted auditing standards used are other than those of Bermuda, the report of the auditor shall identify the generally accepted auditing

Ð 254 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

standards used. All members of the company are entitled to receive a copy of every financial statement prepared in accordance with these requirements, at least seven days before the general meeting of the company at which the financial statements are to be tabled.

(h) Auditors

At each annual general meeting, a company must appoint an auditor to hold office until the close of the next annual general meeting; however, this requirement may be waived if all of the shareholders and all of the directors, either in writing or at the general meeting, agree that there shall be no auditor.

A person, other than an incumbent auditor, shall not be capable of being appointed auditor at an annual general meeting unless notice in writing of an intention to nominate that person to the office of auditor has been given not less than 21 days before the annual general meeting. The company must send a copy of such notice to the incumbent auditor and give notice thereof to the members not less than 7 days before the annual general meeting. An incumbent auditor may, however, by notice in writing to the secretary of the company waive the requirements of the foregoing.

Where an auditor is appointed to replace another auditor, the new auditor must seek from the replaced auditor a written statement as to the circumstances of the latter’s replacement. If the replaced auditor does not respond within 15 days, the new auditor may act in any event. An appointment as auditor of a person who has not requested a written statement from the replaced auditor is voidable by a resolution of the shareholders at a general meeting. An auditor who has resigned, been removed or whose term of office has expired or is about to expire, or who has vacated office is entitled to attend the general meeting of the company at which he is to be removed or his successor is to be appointed; to receive all notices of, and other communications relating to, that meeting which a member is entitled to receive; and to be heard at that meeting on any part of the business of the meeting that relates to his duties as auditor or former auditor.

(i) Exchange control

An exempted company is usually designated as “non-resident” for Bermuda exchange control purposes by the Bermuda Monetary Authority. Where a company is so designated, it is free to deal in currencies of countries outside the Bermuda exchange control area which are freely convertible into currencies of any other country. The permission of the Bermuda Monetary Authority is required for the issue of shares and warrants by the company and the subsequent transfer of such shares and warrants. In granting such permission, the Bermuda Monetary Authority accepts no responsibility for the financial soundness of any proposals or for the correctness of any statements made or opinions expressed in any document with regard to such issue. Before the company can issue or transfer any further shares and warrants in excess of the amounts already approved, it must obtain the prior consent of the Bermuda Monetary Authority.

Permission of the Bermuda Monetary Authority will normally be granted for the issue and transfer of shares and warrants to and between persons regarded as resident outside Bermuda for exchange control purposes without specific consent for so long as the shares and warrants are listed Ð 255 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

on an appointed stock exchange (as defined in the Companies Act). Issues to and transfers involving persons regarded as “resident” for exchange control purposes in Bermuda will be subject to specific exchange control authorisation.

(j) Taxation

Under present Bermuda law, no Bermuda withholding tax on dividends or other distributions, nor any Bermuda tax computed on profits or income or on any capital asset, gain or appreciation will be payable by an exempted company or its operations, nor is there any Bermuda tax in the nature of estate duty or inheritance tax applicable to shares, debentures or other obligations of the company held by non-residents of Bermuda. Furthermore, a company may apply to the Minister of Finance of Bermuda for an assurance, under the Exempted Undertakings Tax Protection Act 1966 of Bermuda, that no such taxes shall be so applicable until 28 March 2016, although this assurance will not prevent the imposition of any Bermuda tax payable in relation to any land in Bermuda leased or let to the company or to persons ordinarily resident in Bermuda.

(k) Stamp duty

An exempted company is exempt from all stamp duties except on transactions involving “Bermuda property”. This term relates, essentially, to real and personal property physically situated in Bermuda, including shares in local companies (as opposed to exempted companies). Transfers of shares and warrants in all exempted companies are exempt from Bermuda stamp duty.

(l) Loans to directors

Bermuda law prohibits the making of loans by a company to any of its directors or to their families or companies in which they hold more than a 20 per cent. interest, without the consent of any member or members holding in aggregate not less than nine-tenths of the total voting rights of all members having the right to vote at any meeting of the members of the company. These prohibitions do not apply to anything done to provide a director with funds to meet the expenditure incurred or to be incurred by him for the purposes of the company, provided that the company gives its prior approval at a general meeting or, if not, the loan is made on condition that it will be repaid within six months of the next following annual general meeting if the loan is not approved at or before such meeting. If the approval of the company is not given for a loan, the directors who authorised it will be jointly and severally liable for any loss arising therefrom.

(m) Inspection of corporate records

Members of the general public have the right to inspect the public documents of a company available at the office of the Registrar of Companies in Bermuda which will include the company’s certificate of incorporation, its memorandum of association (including its objects and powers) and any alteration to the company’s memorandum of association. The members of the company have the additional right to inspect the bye-laws of a company, minutes of general meetings and the company’s audited financial statements, which must be presented to the annual general meeting. Minutes of general meetings of a company are also open for inspection by directors of the company without charge for not less than two hours during business hours each day. The register of members Ð 256 Ð APPENDIX VI SUMMARY OF THE CONSTITUTION OF HANG TEN GROUP HOLDINGS LIMITED AND BERMUDA COMPANY LAW

of a company is open for inspection by members without charge and to members of the general public for a fee. The company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside Bermuda. Any branch register of members established by the company is subject to the same rights of inspection as the principal register of members of the company in Bermuda. Any person may require a copy of the register of members or any part thereof which must be provided within fourteen days of a request. Bermuda law does not, however, provide a general right for members to inspect or obtain copies of any other corporate records.

A company is required to maintain a register of directors and officers at its registered office and such register must be made available for inspection for not less than two hours in each day by members of the public without charge.

(n) Winding up

A company may be wound up by the Bermuda court on application presented by the company itself, its creditors or its contributors. The Bermuda court also has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the Bermuda court, just and equitable that such company be wound up.

A company may be wound up voluntarily when the members so resolve in general meeting, or, in the case of a limited duration company, when the period fixed for the duration of the company by its memorandum expires, or the event occurs on the occurrence of which the memorandum provides that the company is to be dissolved. In the case of a voluntary winding up, such company is obliged to cease to carry on its business from the time of passing the resolution for voluntary winding up or upon the expiry of the period or the occurrence of the event referred to above. Upon the appointment of a liquidator, the responsibility for the company’s affairs rests entirely in his hands and no future executive action may be carried out without his approval.

Where, on a voluntary winding up, a majority of directors make a statutory declaration of solvency, the winding up will be a members’ voluntary winding up. In any case where such declaration has not been made, the winding up will be a creditors’ voluntary winding up.

In the case of a members’ voluntary winding up of a company, the company in general meeting must appoint one or more liquidators within the period prescribed by the Companies Act for the purpose of winding up the affairs of the company and distributing its assets. If the liquidator at any time forms the opinion that such company will not be able to pay its debts in full, he is obliged to summon a meeting of creditors.

As soon as the affairs of the company are fully wound up, the liquidator must make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of, and thereupon call a general meeting of the company for the purposes of laying before it the account and giving an explanation thereof. This final general meeting requires at least one month’s notice published in an appointed newspaper in Bermuda.

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In the case of a creditors’ voluntary winding up of a company, the company must call a meeting of creditors of the company to be summoned on the day following the day on which the meeting of the members at which the resolution for winding up is to be proposed is held. Notice of such meeting of creditors must be sent at the same time as notice is sent to members. In addition, such company must cause a notice to appear in an appointed newspaper on at least two occasions.

The creditors and the members at their respective meetings may nominate a person to be liquidator for the purposes of winding up the affairs of the company provided that if the creditors nominate a different person, the person nominated by the creditors shall be the liquidator. The creditors at the creditors’ meeting may also appoint a committee of inspection consisting of not more than five persons.

If a creditors’ winding up continues for more than one year, the liquidator is required to summon a general meeting of the company and a meeting of the creditors at the end of each year to lay before such meetings an account of his acts and dealings and of the conduct of the winding up during the preceding year. As soon as the affairs of the company are fully wound up, the liquidator must make an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of, and thereupon shall call a general meeting of the company and a meeting of the creditors for the purposes of laying the account before such meetings and giving an explanation thereof.

5. GENERAL

Conyers Dill & Pearman, the Company’s legal advisers on Bermuda law, have sent to the Company a letter of advice summarising certain aspects of Bermuda company law. This letter is available for inspection as referred to in the paragraph headed “Documents available for inspection” in Appendix VII. Any person wishing to have a detailed summary of Bermuda company law or advice on the differences between it and the laws of any jurisdiction with which he is more familiar is recommended to seek independent legal advice.

Ð 258 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

FURTHER INFORMATION ABOUT HANG TEN

1. Incorporation

Hang Ten was incorporated in Bermuda under the Companies Act as an exempted company with limited liability on 17 July 2002. Hang Ten has an established place of business in Hong Kong at Room 107, 1st Floor, St. George’s Building, 2 Ice House Street, Central, Hong Kong and was registered as an overseas company in Hong Kong under Part XI of the Companies Ordinance on 3 September 2002. Such registration contains a notice of appointment of Chan Wing Sun of 12B Bowen Road, Hong Kong and Kenneth Hung of Unit E, 12th Floor, Tower 8, Island Resort, 28 Siu Sai Wan Road, Chai Wan, Hong Kong as the agents of Hang Ten for the purposes of acceptance of service of process in Hong Kong on its behalf. As Hang Ten was incorporated in Bermuda, its operations are subject to the Companies Act and to its constitution which comprises its memorandum of association and bye-laws. A summary of the various parts of its constitution and relevant aspects of the Companies Act is set out in Appendix VI to this document.

2. Changes in share capital of Hang Ten

(a) At the date of incorporation of Hang Ten, its authorised share capital was HK$100,000 divided into 10,000,000 shares of HK$0.01 each, all of which were allotted and issued to Mr. Kenneth Hung.

(b) On 24 October 2002, a resolution was passed by the sole shareholder of Hang Ten to the effect that, subject to the Sale and Purchase Agreement becoming unconditional and with effect from the date of completion of the Sale and Purchase Agreement, the authorised and issued share capital of Hang Ten of HK$100,000 divided into 10,000,000 ordinary shares of HK$0.01 each will be sub-divided into 100,000,000 ordinary shares of HK$0.001 each and, following such subdivision, the authorised share capital of Hang Ten will be increased from HK$100,000 divided into 100,000,000 shares of HK$0.001 each to HK$323,070,000, of which HK$250,000,000 will be divided into 250,000,000,000 Hang Ten Shares of HK$0.001 each and HK$73,070,000 will be divided into 7,307 CPS of HK$10,000 each, by the creation of an additional 249,900,000,000 Hang Ten Shares and 7,307 CPS.

(c) Save as aforesaid and in the sections headed “Corporate reorganisation” and “Written resolutions of the sole shareholder of Hang Ten passed on 24 October 2002” below, there has been no alteration in the share capital of Hang Ten since the date of its incorporation.

(d) Assuming that the Proposal becomes unconditional and Closing takes place, but taking no account of any Hang Ten Shares which may be issued on conversion of the CPS held by the Investors or exercise of the Warrants or Options that may be granted, the authorised share capital of Hang Ten immediately following Closing will be HK$323,070,000, of which HK$250,000,000 will be divided into 250,000,000,000 Hang Ten Shares and HK$73,070,000 will be divided into 7,307 CPS, and the issued capital of Hang Ten will be HK$97,480,000, of which HK$27,100,000 will be divided into 27,100,000,000 Hang Ten Shares and HK$70,380,000 will be divided into 7,038 CPS, fully paid or credited as fully paid, and 222,900,000,000 Hang Ten Shares will remain unissued. Other than pursuant to the conversion

Ð 259 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

of the CPS or exercise of the Warrants or any Options that may be granted, there is no intention to issue any part of the authorised but unissued capital of Hang Ten.

3. Written resolutions of the sole shareholder of Hang Ten passed on 24 October 2002.

Pursuant to written resolutions passed by the sole shareholder of Hang Ten on 24 October 2002:

(a) subject to the Sale and Purchase Agreement becoming unconditional and with effect from the date of completion of the Sale and Purchase Agreement, the authorised and issued share capital of Hang Ten of HK$100,000 divided into 10,000,000 ordinary shares of HK$0.01 each will be sub-divided into 100,000,000 ordinary shares of HK$0.001 each and, following such subdivision, the authorised share capital of Hang Ten will be increased from HK$100,000 divided into 100,000,000 shares of HK$0.001 each to HK$323,070,000, of which HK$250,000,000 will be divided into 250,000,000,000 Hang Ten Shares of HK$0.001 each and HK$73,070,000 will be divided into 7,307 CPS of HK$10,000 each, by the creation of an additional 249,900,000,000 Hang Ten Shares and 7,307 CPS;

(b) subject to and conditional upon the fulfilment or waiver of the conditions set out in the Restructuring Agreement and the Scheme becoming effective, the Directors were authorised to allot and issue, credited as fully paid, an aggregate of 300,000,000 Hang Ten Shares to the Akai Shareholders entitled thereto (or person(s) selected by the Liquidators) in accordance with the terms of the Scheme as consideration for the Akai Shares;

(c) subject to and conditional upon the fulfilment or waiver of the conditions set out in the Restructuring Agreement and Closing taking place, the Directors were authorised to allot and issue, credited as fully paid, an aggregate of 2,100,000,000 Hang Ten Shares to Akai (or as it may direct);

(d) subject to the Sale and Purchase Agreement becoming unconditional, the Directors were authorised to execute on behalf of Hang Ten the Warrant Instrument and allot and issue, credited as fully paid, a total of 7,307 CPS, a total of 21,910,000,000 Hang Ten Shares and Warrants in an aggregate principal amount of HK$44,020,000 to the Investors and the Other Investors (or such other persons as they may respectively designate) in accordance with their respective entitlements thereto pursuant to the terms of the Sale and Purchase Agreement and to credit as fully paid the 100,000,000 Hang Ten Shares resulting from the sub-division described in paragraph 3(a) above held by Mr. Kenneth Hung as partial satisfaction of the consideration attributable to him for the sale of his interest in Hang Ten (BVI) to Hang Ten;

(e) conditional upon the Listing Committee of the Stock Exchange granting approval for the Share Option Scheme and the grant of Options thereunder and the listing of and permission to deal in the Hang Ten Shares which may fall to be issued pursuant to the exercise of any such Options, the rules of the Share Option Scheme were approved and adopted and the Directors were authorised to grant Options to subscribe for Hang Ten Shares thereunder and to allot, issue and deal with Hang Ten Shares pursuant to the exercise of Options that may be granted and to do all such acts and things as they may consider necessary or expedient to implement the Share Option Scheme; Ð 260 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(f) subject to and conditional upon the fulfilment or waiver of the conditions set out in the Restructuring Agreement:

(i) a general unconditional mandate was given to the Directors to exercise all the powers of Hang Ten to allot, issue and deal with, otherwise than by way of rights issues or an issue of Hang Ten Shares upon the exercise of any conversion rights attached to the CPS or subscription rights attached to the Warrants or any warrants or convertible securities or pursuant to the exercise of any Options which may be granted under the Share Option Scheme or any other option scheme or other similar arrangements or any scrip dividend schemes in accordance with the bye-laws of Hang Ten or a specific authority granted by the shareholders of Hang Ten in general meeting, Hang Ten Shares or securities or options convertible into Hang Ten Shares with an aggregate nominal amount not exceeding 20% of the aggregate nominal value of the ordinary share capital of Hang Ten in issue immediately following Closing but prior to conversion of the CPS held by the Investors or exercise of the Warrants, such mandate to remain in effect until whichever is the earliest of:

(1) the conclusion of the next annual general meeting of Hang Ten;

(2) the expiration of the period within which the next annual general meeting of Hang Ten is required by its bye-laws or any applicable laws of Bermuda to be held; or

(3) the passing of an ordinary resolution by shareholders of Hang Ten in general meeting revoking or varying such mandate;

(ii) a general unconditional mandate was given to the Directors authorising them to exercise all the powers of Hang Ten to repurchase on the Stock Exchange, or any other stock exchange on which the securities of Hang Ten may be listed and which is recognised by the SFC and the Stock Exchange for this purpose, in accordance with all applicable laws and the requirements of the Listing Rules (or of such other stock exchange), such number of Hang Ten Shares with an aggregate nominal value not exceeding 10% of the aggregate nominal value of the ordinary share capital of Hang Ten in issue immediately following Closing but prior to conversion of the CPS held by the Investors or exercise of the Warrants, such mandate to remain in effect until whichever is the earliest of:

(1) the conclusion of the next annual general meeting of Hang Ten;

(2) the expiration of the period within which the next annual general meeting of Hang Ten is required by its bye-laws or any applicable laws of Bermuda to be held; or

(3) the passing of an ordinary resolution by shareholders of Hang Ten in general meeting revoking or varying such mandate.

Ð 261 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(iii) the general unconditional mandate mentioned in (i) above was extended by the addition to the aggregate nominal value of the ordinary share capital of Hang Ten which may be allotted or agreed conditionally or unconditionally to be allotted by the Directors pursuant to such general mandate of an amount representing the aggregate nominal value of the ordinary share capital of Hang Ten repurchased by it (if any) under the authority granted to the Directors as referred to in (ii) above;

(g) the bye-laws of Hang Ten were adopted.

4. Corporate reorganisation

On 28 March 2002, ILC disposed of the entire issued share capital of Hang Ten (China) Group Limited to Accurate Sino Developments Limited for a cash consideration of US$20,000. Accurate Sino Developments Limited is a company in which the Investors collectively hold an indirect interest of approximately 97.01%. As a result of this disposal, Hang Ten (China) Group Limited ceased to be a wholly owned subsidiary of ILC.

On 28 October 2002, Hang Ten (BVI), Asian Wide, a company beneficially owned by Mr. Kenneth Hung and his family members, and YGM entered into two agreements with the Other Investors, Best Standand Limited and Raytop Limited, respectively, pursuant to which Hang Ten (BVI) will issue 21,839 shares and 16,379 shares of US$0.10 each to Best Standand Limited and Raytop Limited respectively, representing approximately 2.10% and 1.58% respectively of its issued share capital as enlarged by these shares. The consideration for the issue of these shares will be satisfied in cash as to HK$20 million by Best Standand Limited and HK$15 million by Raytop Limited. Completion of these two agreements will take place prior to the completion of the Sale and Purchase Agreement.

On 28 October 2002, the Investors, the Other Investors and Hang Ten entered into the Sale and Purchase Agreement pursuant to which Hang Ten will acquire from the Investors and the Other Investors their interest in the entire issued share capital of Hang Ten (BVI), which will be satisfied by 7,307 CPS,

Ð 262 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED a total of 22,010,000,000 Hang Ten Shares credited as fully paid and Warrants in an aggregate principal amount of HK$44,020,000 to the Investors and the Other Investors in the proportions set out below.

No. of Approximate Warrants percentage of (to be issued shares held in in principal Hang Ten No. of Hang amount of Names (BVI) No. of CPS Ten Shares HK$0.01 each)

Asian Wide 60.68% 4,434 12,600,000,000 2,520,000,000 Kenneth Hung 3.85% 282 800,000,000 160,000,000 Dennis Kung 1.93% 141 400,000,000 80,000,000 Peggy Hung 1.93% 141 400,000,000 80,000,000 Pamela Hung 1.93% 141 400,000,000 80,000,000 YGM 24.08% 1,759 5,000,000,000 1,000,000,000 Wang Li Wen 0.96% 70 200,000,000 40,000,000 Kao Yu Chu 0.96% 70 200,000,000 40,000,000 Best Standand Limited 2.10% 153 463,000,000 92,600,000 Raytop Limited 1.58% 116 347,000,000 69,400,000 Designated Person Ð Ð 1,200,000,000 240,000,000

Total: 100.00% 7,307 22,010,000,000 4,402,000,000

Completion of the Sale and Purchase Agreement is conditional on the issue of the Closing Notice and will take place on or immediately prior to Closing. Upon completion of the Sale and Purchase Agreement, Hang Ten (BVI) will become a wholly owned Subsidiary of Hang Ten.

5. Changes in the share capital of members of the Hang Ten (BVI) Group

Members of the Hang Ten (BVI) Group are referred to in the accountants’ report, the text of which is set out in Appendix II to this document.

Within the two years immediately preceding the date of this document, changes in the share capital of the following members of the Hang Ten (BVI) Group have taken place:

(a) Pursuant to a subscription agreement dated 9 November 2001 entered into between the Investors and Hang Ten (BVI), Hang Ten (BVI) issued a total of 999,999 new shares of US$0.10 each to the Investors at a price of US$17 per share for a total cash consideration of US$16,999,983 (equivalent to approximately HK$132.6 million); The total issued share capital of Hang Ten (BVI) immediately following completion of this agreement comprised, 1,000,000 ordinary shares of US$0.10 each; and

Ð 263 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(b) Pursuant to two agreements dated 28 October 2002 entered into between Hang Ten (BVI), Asian Wide, a company beneficially owned by Mr. Kenneth Hung and his family members, YGM and the Other Investors, Hang Ten (BVI) will issue 21,839 shares and 16,379 shares of US$0.10 each to Best Standand Limited and Raytop Limited respectively, the consideration for which will be satisfied in cash as to HK$20 million by Best Standand Limited and HK$15 million by Raytop Limited.

As at the Latest Practicable Date, the total issued share capital of Hang Ten (BVI) comprised 1,000,000 ordinary shares of US$0.10 each.

Save as aforesaid, there has been no alteration in the share capital of any members of the Hang Ten (BVI) Group within the two years immediately preceding the date of this document.

6. Purchase by Hang Ten of its own shares

This section includes information required by the Stock Exchange to be included in this document concerning the repurchase by Hang Ten of its own securities.

The Listing Rules permit companies whose primary listings are on the Stock Exchange to repurchase its securities on the Stock Exchange subject to certain restrictions, the most important of which are summarised below:

(a) Shareholders’ approval

All repurchases on the Stock Exchange by a company with its primary listing on the Stock Exchange must be approved in advance by an ordinary resolution of the shareholders, either by way of general mandate or by specific approval in relation to a particular transaction.

Note: On 24 October 2002, a written resolution was passed by the sole shareholder of Hang Ten, whereby, conditional upon listing, a general unconditional mandate (“buyback mandate”) was given to the Directors authorising the Directors to exercise all powers of Hang Ten to repurchase on the Stock Exchange or any other stock exchange recognised by the SFC and the Stock Exchange for this purpose, such number of Hang Ten Shares as will represent up to ten per cent. of the aggregate nominal amount of the ordinary share capital of Hang Ten in issue immediately following Closing but prior to conversion of the CPS held by the Investors or exercise of the Warrants at any time until the next annual general meeting of Hang Ten or until the buyback mandate is revoked or varied earlier by an ordinary resolution of its shareholders in general meeting or at the time when its next annual general meeting is required by law or its bye-laws to be held, whichever is the earliest.

(b) Exercise of the buyback mandate

Exercise in full of buyback mandate, on the basis of 27,100,000,000 Hang Ten Shares in issue immediately following the listing of the Hang Ten Shares but prior to the conversion of any CPS held by the Investors or exercise of any Warrants, could accordingly result in up to 2,710,000,000 Hang Ten Shares being repurchased by Hang Ten during the period prior to the conclusion of the next annual general meeting of Hang Ten, the expiration of the period within which the next annual general meeting of Hang Ten is required by law or its bye-laws to be held or when revoked or varied by an ordinary resolution of the shareholders in general meeting of Hang Ten, whichever is the earliest. Ð 264 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

Repurchases of Hang Ten Shares will only be made if the Directors believe that such repurchases will benefit Hang Ten and its shareholders. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net value of Hang Ten and its assets and/or its earnings per Hang Ten Share.

(d) Funding of repurchases

In repurchasing securities, Hang Ten may only apply funds legally available for such purpose in accordance with its bye-laws, the Listing Rules and the applicable laws of Bermuda.

There might be a material adverse impact on the working capital or gearing position of Hang Ten (as compared with the position disclosed in this document) in the event that the buyback mandate is exercised in full. However, the Directors do not propose to exercise the buyback mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of Hang Ten or the gearing levels which in the opinion of the Directors are from time to time appropriate for Hang Ten.

(e) General

None of the Directors or, to the best of their knowledge having made all reasonable enquiries, any of their associates have any present intention to sell Hang Ten Shares to Hang Ten or its Subsidiaries if the buyback mandate is exercised.

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the buyback mandate in accordance with the bye-laws of Hang Ten, the Listing Rules and the applicable laws of Bermuda.

No connected Person (as defined in the Listing Rules) has notified Hang Ten that he has a present intention to sell Hang Ten Shares to Hang Ten, or has undertaken not to do so, in the event that the buyback mandate is exercised.

If as a result of a repurchase of Hang Ten Shares pursuant to an exercise of the buyback mandate, a shareholder’s proportionate interest in the voting rights of Hang Ten increases, such increase will be treated as an acquisition for the purposes of the Code. Accordingly, a shareholder or group of shareholders acting in concert (as interpreted according to the Code) could obtain or consolidate control of Hang Ten and become obliged to make a mandatory offer in accordance with Rule 26 of the Code as a result of any such increase depending on the percentage of voting rights attached to the Hang Ten Shares owned by the relevant shareholder or the shareholders acting in concert (as the case may be). Based on 27,100,000,000 issued Hang Ten Shares immediately following Closing but prior to any conversion of the CPS held by the Investors or exercise of the Warrants, if the Directors exercise in full the power to repurchase Hang Ten Shares from shareholders other than the Investors and parties acting in concert with them, the total shareholding of the

Ð 265 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

Investors and parties acting in concert with them in the issued ordinary share capital of Hang Ten would be increased to 100% of the issued ordinary share capital of Hang Ten. The Directors are not aware of any consequence that would arise under the Code as a result of any repurchases pursuant to the buyback mandate.

Such an increase would however mean that the total amount of the issued ordinary share capital of Hang Ten in public hands would be reduced to less than 25% and this would only be permitted if the Stock Exchange agrees to waive the dealing restriction regarding the percentage of public shareholding referred to under paragraph (a)(iii) above. It is believed that a waiver of this provision would not normally be given other than in exceptional circumstances. The Directors do not intend to exercise the buyback mandate to such an extent as will result in the number of Hang Ten Shares which are in public hands falling below 25% or the relevant prescribed minimum percentage required by the Stock Exchange from time to time.

Hang Ten has not repurchased any Hang Ten Shares in the six months preceding the Latest Practicable Date.

FURTHER INFORMATION ABOUT THE BUSINESS

7. Material contracts

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

(a) a shareholders’ agreement dated 14 June 1996, as supplemented by an agreement dated 10 June, 2002, between, among others, ILC and the other shareholders of Hang Ten Phils., Corp. in relation to the establishment of and their shareholdings in Hang Ten Phils., Corp.;

(b) a joint venture agreement dated 23 October 2000 between ILC and Global Inc. in relation to the establishment, management and operation of Hang Ten Korea Corp. as amended by two amendment agreements dated 31 January and 1 June 2001 respectively;

(c) a share purchase agreement dated 9 November 2001 entered into between Hang Ten (BVI), certain of the Investors and other third parties pursuant to which Hang Ten (BVI) acquired from such Investors and third parties approximately 97.01% of the issued share capital of ILC for a total cash consideration of approximately US$54.6 million (equivalent to approximately HK$425.88 million);

(d) a subscription agreement dated 9 November 2001 entered into between Hang Ten (BVI) and the Investors pursuant to which Hang Ten (BVI) issued to the Investors an aggregate of 999,999 shares of US$0.10 each at a price of US$17 per share for a total cash consideration of US$16,999,983 (equivalent to approximately HK$132.6 million);

Ð 266 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(e) a shareholders’ agreement dated 9 November 2001 entered into between Hang Ten (BVI) and the Investors in relation to the regulation of the businesses, affairs and management of Hang Ten (BVI);

(f) shareholder’s loan agreements dated 9 November 2001 between members of the Kung Family and YGM as lenders and Hang Ten (BVI) as borrower (as supplemented by two agreements dated 21 June 2002 between Asian Wide and YGM respectively as lenders and Hang Ten (BVI) as borrower) in relation to the granting of loans by the Kung Family in an aggregate principal amount of US$15 million and by YGM in an aggregate principal amount of US$5 million to Hang Ten (BVI);

(g) a disposal agreement dated 28 March 2002 entered into between ILC and Accurate Sino Developments Limited pursuant to which ILC disposed of the entire issued share capital of Hang Ten (China) Group Limited to Accurate Sino Developments Limited for a cash consideration of US$20,000;

(h) the Restructuring Agreement;

(i) a subscription agreement dated 28 October 2002 entered into between Hang Ten (BVI) and Best Standand Limited pursuant to which Hang Ten (BVI) will issue 21,839 shares of US$0.10 each in its capital to Best Standand Limited for a cash consideration of HK$20 million;

(j) a subscription agreement dated 28 October 2002 entered into between Hang Ten (BVI) and Raytop Limited pursuant to which Hang Ten (BVI) will issue 16,379 shares of US$0.10 each in its capital to Raytop Limited for a cash consideration of HK$15 million; and

(k) the Sale and Purchase Agreement.

Ð 267 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

8. Intellectual property rights

Trademarks

As at the Latest Practicable Date, the Hang Ten (BVI) Group had obtained registration of the following marks:

Class (note: Period of (I) = international Registration Validity and Trade/Service Place of Class; (N) = Registration Date Expiry Date Mark Registration national Class) Number d/m/y d/m/y Product/Services Covered

ALGERIA 25 (I) 51038 30/06/1996 30/06/2006 Clothing, footwear, headgear and all goods in Class 25.

ARGENTINA 03 (I) 1.483.746 30/11/1993 30/11/2003 All goods in the Class.

ARGENTINA 14 (I) 1.483.747 30/11/1993 30/11/2003 All goods in the Class.

ARGENTINA 18 (I) 1.483.748 30/11/1993 30/11/2003 All goods in the Class.

ARGENTINA 21 (I) 1.483.749 30/11/1993 30/11/2003 All goods in the Class.

ARGENTINA 24 (I) 1.483.750 30/11/1993 30/11/2003 All goods in the Class.

ARGENTINA 25 (I) 1.483.751 30/11/1993 30/11/2003 All goods in the Class.

ARGENTINA 26 (I) 1.483.752 30/11/1993 30/11/2003 All goods in the Class.

ARGENTINA 28 (I) 1.417.823 26/02/1993 26/02/2003 All goods in the Class.

ARGENTINA 03 (I) 1.398.344 29/05/1992 29/05/2002 Perfumery, essential oils, cosmetics. Toilet products.

ARGENTINA 28 (I) 1.483.756 30/11/1993 30/11/2003 All goods in this Class.

HANG TEN ARGENTINA 25 (I) 1.421.374 26/02/1993 26/02/2003 Ready made clothing, footwear, SUNWEAR tailor’s shops, millinery, caps making, fashions, umbrella and gloves shops, shirts, underwear and stockings specially designed for the practice of sports.

ARGENTINA 28 (I) 1.418.402 26/02/1993 26/02/2003 All goods in this Class.

ARGENTINA 28 (I) 1.421.415 26/02/1993 26/02/2003 All goods in the Class except rubber balls, rubber toys, physical rehabilitation apparatus, inflatable or transportable plastic swimming pools.

ARGENTINA 25 (I) 1.418.401 26/02/1993 26/02/2003 All goods in this Class.

Ð 268 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

ARGENTINA 25 (I) 1.421.356 26/02/1993 26/02/2003 All goods in Class except garments made of natural or imitation fur.

ARGENTINA 28 (I) 1.520.930 31/05/1994 31/05/2004 Shirts, underwear and stockings designed for practicing sports, garments made of natural furs or imitation furs.

ARGENTINA 25 (I) 1.532.926 29/07/1994 29/07/2004 All goods in the Class.

ARGENTINA 25 (I) 1.407.066 30/10/1992 30/10/2002 All goods in the Class.

ARGENTINA 28 (I) 1.407.067 30/10/1992 30/10/2002 All goods in the Class.

ARGENTINA 18 (I) 1.661.337 19/03/1998 19/03/2008 All goods in the Class.

ARGENTINA 25 (I) 1.534.179 29/07/1994 29/07/2004 All goods in the Class except shirts, underwear and stockings (except those designed for practising sports), garments made of natural and imitation furs.

ARGENTINA 25 (I) 1.474.990 30/09/1993 30/09/2003 Shirts, underclothing and socks, except those specially designed for practicing sports.

ARGENTINA 24 (I) 1.491.362 30/11/1993 30/11/2003 Cloths and fabrics in general, except sail cloth, knitted fabrics, handkerchiefs, table cloths, napkins and towels, except of paper, sheets, pillowcases and bed covers, blanket except electric blankets.

ARGENTINA 25 (I) 1.531.343 29/07/1994 29/07/2004 All goods in the Class.

ARGENTINA 28 (I) 1.534.180 29/07/1994 29/07/2004 Sports articles.

ARGENTINA 28 (I) 1.553.413 28/02/1995 28/02/2005 All goods in the Class except sports articles

AUSTRALIA 25 (I) 286551 16/04/1975 16/04/2006 Footwear, headgear, including scarves, shorts, swimwear, jeans, pants, skirts, pinafores, shirts, tops, sweaters, hosiery and tennis apparel.

AUSTRALIA 16 (I) 296756 11/05/1976 11/05/2007 Stationery and paper including printed matter, office and school requisites including binders, school supply carry- alls and pencil pouches all being goods included in this Class.

AUSTRALIA 18 (I) 307805 02/06/1977 02/06/2008 Cases and other luggage carriers in this Class including tote bags and carrying bags in this Class.

Ð 269 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

AUSTRALIA 14 (I) 324409 24/11/1978 24/11/2009 All goods in this Class, but not including items of jewellery consisting of a representation of the mark.

AUSTRALIA 03 (I) 329856 I08/03/1979 08/03/2010 All goods in this Class.

AUSTRALIA 09 (I) 329858 08/03/1979 08/03/2010 All goods in this Class.

AUSTRALIA 25 (I) 329860 08/03/1979 08/03/2010 All goods in this Class.

AUSTRALIA 28 (I) 329,862 08/03/1979 08/03/2010 Sporting articles and equipment included in Class 28.

AUSTRALIA 24 (I) 808921 30/09/1999 30/09/2009 Textiles, and textile goods; cloth and fabric and goods made from cloth and fabric not included in other classes; towels; bedding, table covers.

AUSTRALIA 16 (I) 296757 1/05/1976 11/05/2007 Stationery and paper including printed matter, office and school requisites including binders, school supply carry- alls and pencil pouches all being goods included in this Class.

AUSTRALIA 18 (I) 307806 02/06/1977 02/06/2008 Cases and other luggage carriers in this Class including tote bags and carrying bags in this Class.

AUSTRALIA 14 (I) 324408 24/11/1978 24/11/2009 All goods in this Class.

AUSTRALIA 03 (I) 329855 08/03/1979 08/03/2010 All goods in this Class.

AUSTRALIA 09 (I) 329857 08/03/1979 08/03/2010 All goods in this Class.

AUSTRALIA 25 (I) 329859 09/03/1979 09/03/2010 All goods in this Class.

AUSTRALIA 28 (I) 329,861 08/03/1979 08/03/2010 Sporting articles and equipment included in Class. AUSTRALIA 24 (I) 808923 30/09/1999 30/09/2009 Textiles, and textile goods; cloth and fabric and goods made from cloth and fabric not included in other classes; towels; bedding, table covers.

AUSTRALIA 24 (I) 808922 30/09/1999 30/09/2009 Textiles, and textile goods; cloth and fabric and goods made from cloth and fabric not included in other classes; towels; bedding, table covers.

AUSTRALIA 25 (I) 286550 16/04/1975 16/04/2006 Footwear, headgear including scarves, shorts, swimwears, jeans, pants, skirts, pinafores, shirts, tops, sweaters, hosiery and tennis apparel.

Ð 270 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

AUSTRALIA 28 (I) 291673 30/10/1975 30/10/2006 Sporting articles and equipment included in this Class.

AUSTRIA 25 (I) 76125 21/12/1973 21/12/2003 Clothing including boots, shoes and slippers.

AUSTRIA 03,09,14,16,18, 89829 01/12/1978 01/12/2008 All goods in Classes 03, 09,14,16,18,24 24,28 (I) and 28.

AUSTRIA 03,09,14,16,18, 89930 14/12/1978 14/12/2008 All goods in Classes 03, 09,14,16,18,24,25 24,25,28 (I) and 28.

AZERBAIJAN 25 (I) 991048 22/09/1999 25/07/2006 Clothing, footwear, headgear, and all goods included in Class 25.

BAHAMA 38 (N) 8213 11/08/1975 11/08/2003 Articles of clothing. ISLANDS

BAHAMA 38 (N) 8214 11/08/1975 11/08/2003 Articles of clothing. ISLANDS

BAHRAIN 25 (I) 19799 02/01/1996 02/01/2006 All goods included in Class 25.

BENELUX 14,24,25 (I) 320633 24/07/1973 24/07/2003 All goods included in Classes 14, 24 and 25.

BENELUX 03,09,16,18 and 354802 20/09/1978 20/09/2008 All goods included in Classes 03, 09, 16, 8 (I) 18 and 28.

BENELUX 03,09,14,16,18, 354803 20/09/1978 20/09/2008 All goods included in Classes 03, 09, 24,25,28 (I) 14, 16,18, 24, 25 and 28.

BENELUX 14,24,25 (I) 320634 24/07/1973 24/07/2003 All goods included in Classes 14, 24 and 25.

BENELUX 14,25,28 (I) 0357106 27/12/1978 27/12/2008 All goods included in Classes 14, 25 and 28.

BENELUX 14,25,28 (I) 357402 27/12/1978 27/12/2008 All goods included in Classes 14, 25 and 28.

BRAZIL 25 (N) 007163916 25/05/1980 25/05/2010 All goods included in Class 25.

BRAZIL 28.20 (N) 810520419 10/05/1983 10/05/2003 Articles for sports, gymnastics, hunting, fishing except clothing and clothing accessories.

BRAZIL 03.20 (N) 812630734 05/04/1988 05/04/2008 Perfumery, hygiene products and toiletries.

BRAZIL 25.10, 25.20, 006334687 10/06/1976 10/06/2006 Clothing and accessories for every day 25.30 (N) use, sports and professional use.

BRAZIL 28.20 (N) 810516519 10/05/1983 10/05/2003 Articles for sports, gymnastics, hunting, fishing, sporting goods except clothing and clothing accessories.

Ð 271 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

BRAZIL 03.20 (N) 812630726 05/04/1988 05/04/2008 Perfumery, hygiene products and toiletry articles.

BRAZIL 40.15 (N) 815415850 11/02/1992 11/02/2012 Auxiliary services for merchandising, including import and export.

BRUNEI 25 (I) 20,129 08/08/1994 08/08/2015 Clothing, headwear and footwear in Class 25.

CANADA 25 (I) 191,920 22/06/1973 22/06/2003 Bathing suits, jackets and shirts.

CANADA 16,18,25 (I) 256,580 06/03/1981 06/03/2011 Apparel and apparel accessories, namely bathing suits, jackets, shirts, pants, shorts, overalls, loungewear, sleepwear, hosiery, headwear. Footwear, namely boots, shoes, loafers, moccasins, athletic shoes, sandals and slippers for men, women and children. Stationary products, namely paper, school items. Handbags, totebags and luggage. Sportswear, namely coats, jackets, suits, dresses, skirts, vests, wraps, sweaters, blouses, shirts, jerseys, T-shirts, shells, tunics, jumpers, jumpsuits, ski jackets and pants, jeans, jodhpurs, shorts, ponchos, halters, pedal pushers.

CANADA 09 (I) 352,810 10/03/1989 10/03/2004 Sunglasses.

CANADA 18,25 (I) 256,578 06/03/1981 06/03/2011 Footwear, namely boots, shoes, loafers, moccasins, athletic shoes, sandals and slippers for men, women and children. Handbags, totebags and luggage. Sportswear, namely coats, jackets, suits, dresses, skirts, vests, wraps, sweaters, blouses, shirts, jerseys, T- shirts, shells, tunics, jumpers, jumpsuits, ski jackets and pants, jeans, jodhpurs , shorts ponchos, halters, pedal pushers. Belts, headwear, namely hats, caps and visors, hosiery, men’s and boy’s pants, scarves and sleepwear. Women’s pants. Fleece tops and bottoms and warm-up suits.

CANADA 25 (I) 139,516 12/03/1965 12/03/2010 Bathing suits, jackets and shirts for men, women and boys. CANADA 09 (I) 318,692 19/09/1986 19/09/2016 Sunglasses.

Ð 272 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

CANADA 25 (I) 139,511 12/03/1965 12/03/2010 Bathing suits, jackets and shirts for men, women and boys.

CANADA 18,25 (I) 231,424 05/01/1979 05/01/2009 1: Men’s and boy’s clothing, namely knits, woven and silk print shirts; swimwear, and hosiery. 2: Clothing, namely: tops, shirts and sweatshirts. 3: Clothing, namely: shorts, pants slacks, and sweatpants. 4: Athletic and casual footwear; namely: high-topped and low-topped sneakers, tennis shoes, aerobic shoes, cross-training shoes, running shoes, multi-strap support athletic sandals, hiking boots, thronged and strapped sandals, boots, boat shoes and casual loafers; mittens, gloves, headgear, namely: hats, caps, visors. 5: Active sear, namely: shells, jackets, coats; skiwear, namely: tops, bottoms, jackets, overalls, full suits. 6: Skiwear; namely: tops, bottoms, jackets, overalls, full suits; women’s jump suits and shorts; surfwear, namely: shorts, bathing trunks, bathing suits, and t- shirts. 7: Wallets, backpacks, handbags, duffle bags, and luggage bags of nylon, imitation leather and canvas. 8: Sandals. 9: Clothing, namely: tops, shirts, sweatshirts, sweaters, vests, shorts, shorts sets, pants, slacks, pants sets, sweatpants, jeans, overalls, rompers, skirts, jog- warm-up suits, pajamas, underwear, slipper socks, scarfs, mittens, gloves, sock suspenders, belts, active outerwear, namely: shells, jackets, coats; skiwear, namely: tops, bottoms, jackets, overalls, full suits; beach footwear; namely: beach sandals and aqua socks; athletic casual footwear; namely: high-topped and low-topped sneakers, tennis shoes, aerobic shoes, cross-training shoes, running shoes, multi-strap support athletic sandals, hiking boots, thronged and strapped sandals, boots, boat shoes and casual loafers; headgear namely, hats and caps.

Ð 273 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

CANADA 14,25,28 (I) 287,734 10/02/1984 10/02/2014 1: Skateboards. 2: skate boards and jewelry. 3: swimwear and surfboards. 4: clothing, namely tops, shirts and sweatshirts. 5: clothing, namely shorts, pants, slacks, sweatpants. 6: mittens, gloves; headgear, namely: hats, caps, visors. 7: clothing, namely: active outerwear, namely shells, jackets, coats; skiwear, namely: tops, bottoms, jackets, overalls, full suits. 8: athletic and casual footwear namely: high- topped and low-topped sneakers, tennis shoes, aerobic shoes, cross-training shoes, running shoes, multi-strap support athletic sandals, hiking boots, thonged and strapped sandals, boots, boat shoes and casual loafers. 9: clothing, namely: tops/shirts, sweatshirts, sweaters, vests, shorts, short sets, pants/slacks, pant sets, sweatpants, jeans, overalls, rompers, skirts, jog/warm-up suits, active outerwear, namely: shells, jackets, coats; skiwear, namely: tops, bottoms, jackets, overalls, full suits; pajamas, underwear, hosiery, slipper socks, scarves, mittens, gloves, sock suspenders, suspenders, belts, beach footwear; namely: beach sandals, and aqua socks; athletic/casual footwear; namely: high-topped and low-topped sneakers, tennis shoes, aerobic shoes, cross-training shoes, running shoes, multi-strap support athletic sandals, hiking boots, thonged and strapped sandals, boots, boat shoes and casual loafers; headgear, namely: hats and caps. 10: clothing, namely: knit, woven and screen print shirts and hosiery.

CANADA 25 (I) 233,992 29/06/1979 29/06/2009 1: Shirts and swim shorts. 2: Clothing, namely tops, sweatshirts. 3: Clothing, namely: shorts, pants, slacks, sweatpants. 4: Headgear, namely: hats, visors, caps; mittens, gloves. 5: Active wear, namely: shells, jackets, coats, skiwear, namely: tops, bottoms, jackets, overalls, full suits. 6: Athletic

Ð 274 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

casual footwear, namely: high-topped and low-topped sneakers, tennis shoes, aerobic shoes, cross-training shoes, running shoes, multi-strap support athletic sandals, hiking boots, thronged and strapped sandals, boots, boat shoes and casual loafers. 7: clothing, namely: tops, sweatshirts, sweaters, vests, shorts, shorts sets, pants, slacks, pants sets, sweatpants, jeans, overalls, rompers, skirts, jogging/warm-up suits, swimwear, pajamas, underwear, hosiery, slipper socks, scarves; mittens; gloves; sock suspenders; suspenders; belts; active outerwear, namely: shells, jackets, coats; and skiwear, namely: tops, bottoms, jackets, overalls, full suits; beach footwear, namely: beach sandals and aqua socks; athletic and casual footwear, namely: high-topped and low-topped sneakers, tennis shoes, aerobic shoes, cross-training shoes, running shoes, multi-strap support athletic sandals, hiking boots, thonged and strapped sandals, boots, boat shoes and casual loafers; headwear, namely: hats and caps. 8: vests, swimwear.

CANADA 25 (I) 357,304 16/06/1989 08/08/2010 Sportswear, namely, surfer shorts and T-shirts.

CANADA 25 (I) 368,392 05/04/1990 08/08/2010 Sportswear, namely, surfer shorts and T-shirts.

CHILE 25 (I) 447.192 26/06/1995 26/06/2005 Articles of clothing in general, including shirts, bathing trunks, trousers, jackets, sweaters, underwear, robes, sleepwear shorts, hats, belts and shoes for men and women.

CHILE 03 (I) 546.671 24/08/1999 24/08/2009 All goods in this Class.

CHILE 25 (I) 546.669 24/08/1999 24/08/2009 Clothing for sports and the rest of the goods in this Class.

CHILE 28 (I) 546.670 24/08/1999 24/08/2009 Sporting equipment and accessories and the rest of the goods in this Class.

CHILE 14,16,18,21, 496.299 06/11/1997 06/11/2007 All goods in all the classes. 22,24,26 (I)

CHILE 03 (I) 549.994 11/10/1999 11/10/2009 All products included in this Class. Ð 275 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

CHILE 25 (I) 546.672 24/08/1999 24/08/2009 Clothing for sports and the rest of the goods in this Class.

CHILE 28 (I) 546.673 24/08/1999 24/08/2009 Sporting goods and the rest of the goods in this Class.

CHILE 14,16,18,21,22, 494.661 14/10/1997 14/10/2007 All goods in the classes. 24,26 (I)

CHINA 25 (I) 162347 15/09/1982 In the process Clothing. of renewal

CHINA 25 (I) 681889 14/03/1994 13/03/2004 Clothing, footwear, headwear.

CHINA 25 (I) 162346 15/09/1992 In the process Clothing. of renewal

CHINA 25 (I) 681888 14/03/1994 13/03/2004 Clothing, footwear, headwear.

CHINA 14 (I) 1014586 28/05/1997 27/05/2007 Jewelry, precious stones, watches, clocks, horological and chronometric instruments, parts and fittings for all of the aforesaid goods.

CHINA 24 (I) 793720 21/11/1995 20/11/2005 Handkerchiefs, towels, table mats, not of paper, quilt covers, pillow covers, bed sheets and blankets.

CHINA 18 (I) 754715 07/07/1995 06/07/2005 Leather and imitation of leather, animal skins, hides; trunks and traveling bags, wallets and handbags; umbrellas, parasols and walking sticks; whips, harnesses and saddlery.

CHINA 09 (I) 812671 07/02/1996 06/02/2006 Glasses, sunglasses, photographic apparatus and instruments, namely, camera, photographic and camera accessories, camera stands and cases for cameras and photographic apparatus and instruments.

CHINA 03 (I) 763095 28/08/1995 27/08/2005 Soaps, perfumery, essential oils, cosmetics, hair lotions, dentifrices.

CHINA 25 (I) 1009536 21/05/1997 20/05/2007 Scarfs, mittens, gloves, sock suspenders, suspenders, belts.

CHINA 25 (I) 1009667 21/05/1997 20/05/2007 Scarfs, mittens, gloves, sock suspenders, suspenders, belts.

COLOMBIA 25 (I) 162045 17/05/1994 17/05/2004 All goods in Class 25.

COLOMBIA 24 (I) 150.226 30/03/1994 30/03/2004 All goods in Class 25.

Ð 276 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

COSTA RICA 25 (I) 52171 16/05/1977 16/05/2007 Bathing suits, jackets, shirts, women’s clothing, namely shirts, dresses, skirts, long and short pants’ stockings and shoes.

COSTA RICA 25 (I) 52170 16/05/1977 16/05/2007 Undershirts, skirts, pants, dresses, shorts, shoes, swimming suits, bathing robes, jackets, shirts, sandals and stockings.

COSTA RICA 25 (I) 77356 10/10/1991 In the process Clothing, shoes, hats and caps. of renewal

COSTA RICA 25 (I) 77357 10/10/1991 10/10/2011 Clothing and shoes, hats and caps, dress shirts, sweatshirts, short pants, short pant accessories, pants, pants with accessories, sweat pants, jeans, children’s dresses, skirts, swim wear, socks, scarves, mittens, gloves, suspenders, belts, clothing for outdoor activities and all types of ski wear, all types of shoes hats and caps.

CZECH 25 (I) 195,293 26/11/1996 21/11/2004 Clothing, footwear and headwear. REPUBLIC

DENMARK 25 (I) 1974 3637 VR 15/11/1974 15/11/2004 Clothing, headwear and footwear.

DENMARK 03,09,14,16,18, 1979 1066 VR 20/04/1979 20/04/2009 Cosmetics, optical, jewelry, paper goods, 24,28 (I) bags, textile goods and sporting equipment.

DENMARK 03,09,14, 16,18, 1979 1013 VR 20/04/1979 20/04/2009 Cosmetics, optical, jewelry, paper goods, 24,25,28 (I) bags, textile goods, clothing, sporting goods.

DENMARK 14,25,28 (I) 1970 2837 VR 11/09/1970 11/09/2010 Jewelry, clothing and sporting goods.

DENMARK 25 (I) 1984 2336 VR 01/06/1984 01/06/2004 Clothing.

DOMINICAN 44 (N) 23,835 21/02/1975 21/02/2015 All goods in this Class. REPUBLIC

DOMINICAN 44 (N) 23,838 17/02/1975 17/02/2015 All goods in this Class. REPUBLIC

ECUADOR 25 (I) 554 26/11/1975 24/01/2005 Clothing in general.

ECUADOR 25 (I) 573 27/11/1975 24/01/2005 Clothing in general.

EGYPT 25 (I) 55610 11/08/1985 15/03/2009 Clothing including boots, shoes and slippers.

Ð 277 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

EGYPT 25 (I) 55609 11/08/1985 15/03/2009 All clothing products, including boots, shoes and slippers.

EGYPT 42 (I) 113616 22/03/1998 15/03/2009 Retail store establishments.

EGYPT 25 (I) 76943 09/04/1990 09/04/2010 Clothing and shoes.

EGYPT 25 (I) 76942 09/04/1990 20/03/2003 Clothing and footwear.

EGYPT 25 (I) 76941 09/04/1990 20/01/2003 Clothing and footwear.

EL SALVADOR 24,25 (I) 94 BOOK 111 06/02/1986 06/02/2006 Men’s and women’s clothing including shirts, swimming/bathing suits, pants, jackets, sweaters, underwear, robes, pajamas, shorts, socks hosiery, belts and towels.

EL SALVADOR 24,25 (I) 61 BOOK 78 27/06/1979 27/06/2009 Clothing for gentlemen and ladies including shirts; bathing trunks, trousers, jackets, sweaters, underwear, robes, sleepwear, shorts, hosiery, belts and towels.

FIJI 14 (I) 13132 19/02/1980 In the process Goods of precious metals and jewelry of renewal and imitations of such goods and jewelry.

FIJI 25 (I) 13133 19/02/1980 19/02/2008 Articles of clothing.

FIJI 28 (I) 13134 19/02/1980 19/02/2008 Sporting articles and equipment including surfboards, skateboards and parts and accessories for surfing and skateboarding.

FINLAND 25 (I) 68433 20/12/1973 20/12/2008 All goods in Class 25.

FINLAND 25 (I) 68276 05/12/1978 05/12/2008 All goods in Class 25.

FRANCE 14,25,28 (I) 1 643 714 08/02/1991 07/02/2011 Jewelry, clothing, toys, sporting articles.

FRANCE 03,09,16,18,24 (I) 1 490 210 23/09/1988 22/09/2008 Cosmetics, optical, jewelry, paper goods, bags, textile goods.

FRANCE 03,09,14,16,18, 1 490 211 23/09/1988 22/08/2008 Cosmetics, optical, jewelry, paper goods, 24,25,26 (I) bags, textile goods, clothing, sporting goods including surfboards.

FRANCE 14,25,28 (I) 1 572 456 29/01/1990 28/01/2010 Jewelry, clothing, sporting goods.

FRANCE 16,25,28 (I) 1440211 15/12/1987 14/12/2007 Paper goods, clothing and sporting goods.

FRANCE 14,16,25,28 (I) 1440213 15/12/1987 14/12/2007 Jewelry, paper goods, clothing and sporting goods.

Ð 278 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

FRANCE 14,16,25,28 (I) 1440212 15/12/1987 14/12/2007 Jewelry, paper goods, clothing and sporting goods.

FRANCE 09,25,28 (I) 17/10/2001 17/10/2011 Optical goods, sunglasses, accessories for optical goods, spectacle cases, cords glass holders, glass solar for fixing on spectacles glasses correctors, clothing, footwear (except orthopedic footwear), headgear.

GERMANY 25 (I) 39707196 12/06/1997 28/02/2007 Clothing, footwear and headgear.

GERMANY 03,09,16,18, 993314 16/11/1979 30/11/2008 Toilet articles, cosmetics, sunglasses, 24,28 (I) paper goods, bags, linens, sporting articles, leather goods.

GERMANY 14,25 (I) 890660 17/02/1972 30/07/2010 Clothing for women, men and children including bathing dresses, jackets, bathing jackets, shirts, blouses, sandals and precious and imitation jewelry.

GERMANY 03,09,16,18, 988356 30/07/1979 30/11/2008 Toilet soaps, perfume soaps, hair lotions, 24,28 (I) essential oils, preparations for body and beauty care, in particular skin care and suntan lotions, ointments, and oils, lip balms; sunglasses; paper and paper goods in particular notebook, binders and portfolios; tote and utility bags, trunks and traveling bags, small leather goods, namely wallets, card an toiletry cases; linens and towels; gymnastic and sporting articles in particular surfboards and skate boards, games.

GERMANY 25 (I) 2061839 08/04/1994 30/05/2003 Clothing, footwear and headgear.

GERMANY 25 (I) 2083867 04/11/1994 30/04/2011 Clothing, footwear and headgear.

GERMANY 25 (I) 1118431 25/02/1988 30/05/2007 Ladies wear and mens wear, sports clothes and shoes.

GERMANY 09,25,28 (I) 996665 24/01/1980 31/08/2008 Clothing, as knitted, woven and silk shirts, also printed, surf and bathing suits, skiing suits, men and boys stockings and socks, sports articles, namely, skateboards without motors, surfboards without motors, surfboard waxes, wet suits, including divers and surfing suits.

Ð 279 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

GREECE 25 (I) 50983 18/03/1975 02/08/2003 Articles of clothing including shoes and slippers and in particular bathing suits, jackets, shirts, sandals, footwear, socks, skirts, pants, dresses and shorts.

GREECE 03,09,14,16,18, 62,004 17/07/1980 25/09/2008 Bleaching preparations and other 24,28 (I) substances for laundry use; cleaning, polishing, scouring and abrasive preparations; soaps; perfumery, essential oils, cosmetics, hair lotions; dentifrices, especially, personal-care products, such as cosmetics, skin-care and suntan lotions, ointments, and oils, lip balms, hair lotion, soaps and perfumes. Scientific, nautical, surveying and electrical apparatus and instruments (including wireless), photographic, cinematographic, optical, weighing, measuring, signaling, checking (supervision), life-saving and teach apparatus and instruments; coin or counter-freed apparatus; talking machines; fire-extinguishing apparatus, and especially sunglasses (eyeglasses). Precious metals and their alloys and goods in precious metals or coated therewith (except cutlery, forks and spoons); jewellery; precious stones; horological and other chronometric instruments, and especially jewelry. Paper and paper articles, cardboard and cardboard articles; printed matters, newspapers and periodicals, books; bookbinding material, photographs; stationery, adhesive materials (stationery); artists materials; paint brushes; typewriters and office requisites (other than furniture); instructional and teaching material (other than apparatus); playing cards; (printers’) type and cliches (stereotype), and especially stationery products such as paper, notebooks, binders and portfolios. Leather and imitations of leather, and articles made from these materials, and not included in other classes; skins, hides, trunks and traveling bags; umbrellas, parasols

Ð 280 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

and waling sticks; whips, harness and saddlery, and especially, tote bags and utility bags, and small leather goods such as wallets, fobs and card and toiletry cases. Tissues (piece goods): bad and table covers, textile articles not included in other classes, and especially linens and towels. Clothing, including boots, shoes and slippers. Games and playthings; gymnastic and sporting articles (except clothing); ornaments and decorations for Christmas trees, and especially sporting equipment (specifically surfboards and skateboards) and games.

GREECE 03,09,14,16,18, 62.003 17/07/1980 25/09/2008 Bleaching preparations and other 24,25,28 (I) substances for laundry use; cleaning, polishing, scouring and abrasive preparations; soaps; perfumery, essential oils, cosmetics, hair lotions; dentifrices, especially, personal-care products, such as cosmetics, skin-care and suntan lotions, ointments, and oils, lip balms, hair lotion, soaps and perfumes. Scientific, nautical, surveying and electrical apparatus and instruments (including wireless), photographic, cinematographic, optical, weighing, measuring, signaling, checking (supervision), life-saving and teach apparatus and instruments; coin or counter-freed apparatus; talking machines; fire-extinguishing apparatus, and especially sunglasses (eyeglasses). Precious metals and their alloys and goods in precious metals or coated therewith (except cutlery, forks and spoons); jewellery; precious stones; horological and other chronometric instruments, and especially jewelry. Paper and paper articles, cardboard and cardboard articles; printed matters, newspapers and periodicals, books; bookbinding material, photographs; stationery, adhesive materials (stationery); artists materials; paint brushes; typewriters and office

Ð 281 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

requisites (other than furniture); instructional and teaching material (other than apparatus); playing cards; (printers’) type and cliches (stereotype), and especially stationery products such as paper, notebooks, binders and portfolios. Leather and imitations of leather, and articles made from these materials, and not included in other classes; skins, hides, trunks and traveling bags; umbrellas, parasols and waling sticks; whips, harness and saddlery, and especially, tote bags and utility bags, and small leather goods such as wallets, fobs and card and toiletry cases. Tissues (piece goods): bad and table covers, textile articles not included in other classes, and especially linens and towels. Clothing, including boots, shoes and slippers. Games and playthings; gymnastic and sporting articles (except clothing); ornaments and decorations for Christmas trees, and especially sporting equipment (specifically surfboards and skateboards) and games.

GUATEMALA 28 (I) 36,874 08/05/1979 07/05/2009 Skateboards, surfboards, and related sporting articles including parts and accessories.

GUATEMALA 25 (I) 36,873 08/05/1979 07/05/2009 Shirts, blouses, jackets, pants, shorts, skirts, dresses, hats and scarves and other headwear, hosiery, shoes, and other footwear, swimwear, vests, overalls, ties, sleepwear, loungewear, belts, gloves, sporting and athletic garments.

GUATEMALA 28 (I) 36,765 09/04/1979 09/04/2009 Skateboards, surfboards, and related sporting articles including parts and accessories.

HAITI 25 (I) 154/119 26/04/1978 19/04/2009 Clothing, including boots, shoes and slippers.

HAITI 25 (I) 153/119 26/04/1978 19/04/2009 Clothing, including boots, shoes and slippers.

Ð 282 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

HONDURAS 25 (I) 49.091 15/03/1988 15/03/2008 Clothing for ladies and girls, including swimsuits, T-shirts, dresses, shirts, coats, clothing for men and boys, including swimming trunks, shirts, jackets, shoes, socks and belts.

HONDURAS 25 (I) 49.088 15/03/1988 15/03/2008 Clothing for ladies and girls, including swimsuits, T-shirts, dresses, shirts, coats, clothing for men and boys, including swimming trunks, shirts, jackets, shoes, socks and belts.

HONG KONG 42 (I) 09678/1997 31/10/1996 31/10/2003 Retailing of clothing; all included in Class 42.

HONG KONG 18 (I) 0269/1971 03/04/1970 03/04/2005 Beach bags; leather and imitations of leather, and articles made form these materials and not included in other classes; skins, hides; trunks and traveling bags; umbrellas, parasols and walking sticks; whip, harness and saddlery.

HONG KONG 24 (I) 0270/1971 03/04/1970 03/04/2005 Beach towels; tissues (piece goods) bed and table covers; textile articles not included in other classes.

HONG KONG 25 (I) 0674/1971 10/03/1970 10/03/2005 All articles of clothing including garments for swimming, bathing suits, beach and bathing jackets and shirts.

HONG KONG 25 (I) 1576/1970 10/03/1970 10/03/2005 All articles of clothing including garments for swimming, bathing suits, beach and bathing jackets and shirts.

HONG KONG 18 (I) 1577/1970 03/04/1970 03/04/2005 Beach bags; leather and imitations of leather, and articles made from these materials, and not included in other classes; skins, hides; trunks and traveling bags; umbrellas, parasols and walking sticks; whips, harness and saddlery.

HONG KONG 24 (I) 1578/1970 03/04/1970 03/04/2005 Beach towels; tissues (piece goods); bed and table covers; textile articles not included in other classes.

HONG KONG 42 (I) 06428/1998 31/10/1996 31/10/2003 Retail of clothing; all included in Class 42.

HONG KONG 42 (I) 07849/1998 31/10/1996 31/10/2003 Retail of clothing; all included in Class 42.

Ð 283 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

HONG KONG 25 (I) 0437/1975 25/07/1973 25/07/2008 Bathing suits, jackets, shirts, sandals, shoes, socks, skirts, pants, dresses, shorts.

HONG KONG 09 (I) 2060/1983 04/03/1983 04/03/2004 Scientific, nautical, surveying and electrical apparatus and instruments (including wireless), photographic, cinematographic, optical, weighing, measuring, signaling, checking (supervision), life-saving and teaching apparatus and instruments; coin or counter-freed apparatus; talking machines; cash registers; calculating machines; fire-extinguishing apparatus.

HONG KONG 14 (I) 02268/1997 24/08/1995 24/08/2016 Jewelery, precious stones, watches, clocks, horological and chronometric instruments, parts and fittings for all of the aforesaid goods.

HONG KONG 28 (I) 206/1983 19/06/1981 In the process Surfboards, skateboards, skiing apparatus of renewal and accessories therefor, gymnastic and sporting articles (except clothing) included in Class 28.

HONG KONG 25 (I) 645/1984 19/06/1981 19/06/2016 Articles of clothing, including boots, shoes and slippers.

HONG KONG 28 (I) 205/1983 19/06/1981 19/06/2016 Surfboards, skateboards, skiing apparatus and accessories therefor, gymnastic and sporting articles (except clothing) included in Class 28.

HONG KONG 25 (I) 644/1984 19/06/1981 19/06/2016 Articles of clothing, including boots, shoes and slippers.

HUNGARY 25 (I) 147343 22/10/1997 05/05/2005 Clothing, headwear and footwear.

INDONESIA 25 (I) 213.438 15/01/1987 15/01/2007 Bath clothing, jackets, shirts, sandals, shoes, socks, skirts, pants, clothing and short pants.

INDONESIA 18,24,25,28 (I) 280.335 24/09/1992 In the process Bags and multi-function bags and of renewal small goods from leather, namely: wallets, watch cases and name card cases, linen cloth, towels, all kinds of clothing including boots shoes and sandals, sporting articles (especially skateboards and skating boards), and games.

Ð 284 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

INDONESIA 18,24,25 280.334 24/09/1992 In the process Bags and multi-function bags and and 28 (I) of renewal small goods from leather, namely: wallets, watch cases and name card cases, linen cloth, towels, all kinds of clothing including boots shoes and sandals, sporting articles (especially skateboards and skating boards), and games.

INDONESIA 25 (I) 213.437 15/01/1987 15/01/2007 Bath clothing, jackets, shirts, sandals, socks, skirts, pants, clothing and short pants.

INDONESIA 25 (I) 319214 14/12/1994 14/12/2004 Dresses, skirts, blouses, jumpers, pajamas, nightgowns, robes, loungewear, casual & dressy shoes, sandal, boots, rubber boots, infants’ footwear, slips, undergarments, panties, sweatpants, sweatshirts, sweatsuits, performance wear, and sportswear, namely, pants and shirts, sweaters, printed t-shirts, swimwear, swimsuit cover-ups, leotards, tights, socks, shorts, outerwear, namely, lined and unlined vests, jackets and coats, overalls and headgear, namely hats, caps and visors.

INDONESIA 25 (I) 302398 29/12/1993 29/12/2003 Clothing, including boots, shoes and slippers.

INDONESIA 42 (I) 421894 11/01/1999 26/08/2007 Retails and supermarket trading services for all kinds of goods, such as all kinds of women’s, men’s, children’s and infant’s clothing; footwear and jewelry, precious stones, clocks, other chronometric instruments and all the aforementioned fittings thereof.

IRAN 25 (I) 81447 04/11/1996 04/11/2006 Clothing, namely tops/shirts, sweatshirts, sweaters, vests, shorts, shorts sets, pants/slacks, pants sets, sweatpants, jeans, overalls, rompers, skirts, jog/ warm-up suits, swimwear, pajamas, night gowns, robes, underwear, hosiery, slipper socks, scarves, mittens, gloves, suspenders and belts, active outerwear, namely, shells, jackets and coats, footwear, namely, beach footwear and athletic/casual footwear slippers, headwear, namely, hats, caps and visors.

Ð 285 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

IRELAND 25 (I) B83204 23/07/1973 23/07/2008 Bathing suits, jackets, shirts, sandals, shoes, socks, skirts, pants, dresses, and shorts.

IRELAND 25 (I) B83205 23/07/1973 23/07/2008 Bathing suits, jackets, shirts, sandals, shoes, socks (for wear), skirts, pants, dresses, and shorts.

IRELAND 25 (I) 152755 11/10/1991 11/10/2008 Articles of clothing included in Class 25, footwear, headgear.

IRELAND 25 (I) 152754 11/10/1991 11/10/2008 Articles of clothing included in Class 25, footwear, headgear.

ISRAEL 25 (I) 37929 21/08/1975 25/07/2008 All goods included in Class 25, excluding footwear.

ISRAEL 18 (I) 47519 28/12/1981 23/02/2014 Tote bags included n Class 18, traveling bags, and small leather goods not included in other classes.

ISRAEL 28 (I) 47522 03/03/1982 23/02/2014 Sporting articles included in Class 28.

ISRAEL 25 (I) 47520 18/12/1981 23/02/2014 Articles of clothing, including boots shoes and slippers.

ISRAEL 18 (I) 47518 18/12/1981 23/02/2014 Tote bags included in Class 18, traveling bags and small leather goods not included in other classes.

ISRAEL 28 (I) 47521 03/03/1982 23/02/2014 Sporting articles.

ISRAEL 25 (I) 74995 20/12/1993 04/01/2011 Footwear, undergarments, outerwear, sportswear, headgear, all included in Class 25.

ISRAEL 25 (I) 74993 20/12/1993 04/01/2011 Footwear, undergarments, outerwear, sportswear, headgear, all included in Class 25.

ISRAEL 25 (I) 37928 21/08/1975 25/07/2008 All goods in Class excluding footwear (clothing and headwear).

ITALY 25 (I) 290203 26/07/1975 27/07/2003 Bathing suits, jackets, shirts, sandals, shoes, clogs, skirts, trousers, dresses, socks, shorts.

ITALY 03,09,14,16,18, 345953 18/03/1985 06/03/2007 Cosmetics, optical, jewelry, paper goods, 24,25,28 (I) bags, textile goods, clothing, sporting goods.

ITALY 03,09,14,16,18, 345952 18/03/1985 10/06/2007 Cosmetics, optical, jewelry, paper goods, 24,25,28 (I) bags, textile goods, clothing, sporting goods.

Ð 286 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

N/C ITALY 14,25,28 (I) 263,044 09/08/1972 26/08/2010 Articles of clothing including bathing costumes, jackets and shirts, sandals and shoes; jewels; sliding boards for water sports.

ITALY 16,25,28 (I) 10357 26/12/1977 26/12/2007 Paper goods, clothing including boots, shoes and slippers.

ITALY 16,25,28 (I) 10358 26/12/1977 26/12/2007 Paper goods, clothing including boots, games and playthings; gymnastic and sporting (except clothing); decorations for Christmas trees.

ITALY 25 (I) 585227 11/12/1992 12/05/2010 Art eye wash clothing, footwear, headgear, tops, shirts, plush, sweaters, vests, jackets, shorts, coordinated with shorts, trousers/breeches sporting, coordinated with trousers, jeans, tracksuits, body stockings, skirts, complete for jogging, clothing in drubbing, bathing suits, pajamas, underclothing, stockings, knitted slippers, sashes, berets and hats, beach shoes, athletic shoes for leisure, suspenders, belts, outer clothing for activities (vests, jackets and top coats lined, unsheathed, stuffed/waterproof and not), clothing for skiing, (trouser tops, jackets, tracksuits and complete).

ITALY 14,16,25,28 (I) 10360 26/12/1977 26/12/2007 Jewelry, paper goods, clothing, footwear, and headgear, games and playthings.

ITALY 25 (I) 585228 11/12/1992 11/12/2002 Art eye wash clothing, footwear, headgear, tops, shirts, plush, sweaters, vests, jackets, shorts, coordinated with shorts, trousers/breeches sporting, coordinated with trousers, jeans, tracksuits, body stockings, skirts, complete for jogging, clothing in drubbing, bathing suits, pajamas, underclothing, stockings, knitted slippers, sashes, berets and hats, beach shoes, athletic shoes for leisure, suspenders, belts, outer clothing for activities (vests, jackets and top coats lined, unsheathed, stuffed/waterproof and not), clothing for skiing, (trouser tops, jackets, tracksuits and complete).

Ð 287 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

ITALY 25 (I) 585229 11/12/1992 12/05/2010 Art eye wash clothing, footwear, headgear, tops, shirts, plush, sweaters, vests, jackets, shorts, coordinated with shorts, trousers/breeches sporting, coordinated with trousers, jeans, tracksuits, body stockings, skirts, complete for jogging, clothing in drubbing, bathing suits, pajamas, underclothing, stockings, knitted slippers, sashes, berets and hats, beach shoes, athletic shoes for leisure, suspenders, belts, outer clothing for activities (vests, jackets and top coats lined, unsheathed, stuffed/waterproof and not), clothing for skiing, (trouser tops, jackets, tracksuits and complete).

ITALY 14,16,25,28 (I) 10359 26/12/1977 26/12/2007 Jewelry, paper goods, clothing, footwear, and headgear, games and playthings.

JAMAICA 25 (I) 17358 15/01/1975 15/01/2010 Clothing including shirts, bathing trunks, trousers, jackets, sweaters, underwear, robes, sleepwear, shorts, hats, and hosiery, for both male and female use, belts and shoes.

JAMAICA 25 (I) 17711 15/01/1975 15/01/2010 Clothing including shirts, bathing trunks, trousers, jackets, sweaters, underwear, robes, sleepwear, shorts, hats and belts.

JAPAN 28 (I) 4142711 08/05/1998 08/05/2008 Wax for skis, toys, dolls, Go game equipment (Japanese board game), Shogi game equipment (Japanese chess), dice, sugoroku games (Japanese Parcheesi), dice cups, diamond games, chess games, checkers, conjuring apparatus, dominoes, Mah Jong equipment, game machines, billiard equipment, sporting, gymnastic implements, fishing tackle.

JAPAN 05,09,10,16,17,18, 1044795 01/12/1973 01/12/2003 Headings in each Class. 20,21,22,24, 25,28 (I)

JAPAN 09,14 (I) 2143611 30/05/1989 30/05/2009 Headings in each Class.

JAPAN 17,24,26 (I) 976069 16/08/1972 In the process Headings in each Class. of renewal

Ð 288 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

JAPAN 03,06,08,10,14, 1539307 30/09/1982 In the process Headings in each Class. 18,21,25,26(I) of renewal

JAPAN 06,14,18,21, 1156211 25/09/1975 25/09/2005 Headings in each Class. 22,25,26 (I)

JAPAN 03,05,30 (I) 1571729 28/03/1983 28/03/2003 Headings in each Class.

JAPAN 09(I) 1575568 28/03/1983 28/03/2003 Heading in this Class.

JAPAN 14(I) 1230627 04/11/1976 04/11/2006 Class heading.

JAPAN 06,14,18,21, 1107022 13/02/1975 13/02/2005 Headings in each Class. 22,25, 26 (I)

JAPAN 06,11,14,16,17, 1504369 31/03/1982 In the process Headings in each Class. 19,20,21,22, of renewal 24,26,27,31(I)

JAPAN 05,06,08,10,11,14, 1585684 27/04/1983 27/04/2003 Headings in each Class. 16,17,18,19, 20,21,22,24, 26,27,28,31(I)

JAPAN 14,34 (I) 2643306 28/04/1994 28/04/2004 Headings in each Class.

JAPAN 03,05,20 (I) 2455508 30/09/1992 In the process Headings in each Class. of renewal

JAPAN 05,09,10,16,17, 1873316 27/06/1986 27/06/2006 Headings in each Class. 18,20,21,22, 24,25,28(I)

JAPAN 12(I) 3238886 25/12/1996 25/12/2006 Cable transport installations for cargo handling, car pushers and pullers, tractors, non-electric motors and parts for land vehicles, land vehicle shafts, axles, spindles, journals, shaft couplings, bearings, pulleys, land vehicle power transmissions, land vehicle shock absorbers, springs, land vehicle braking apparatus, parachutes, anti-theft devices for vehicles, wheelchairs, ships, boats and parts, other than air cushion vehicles, aircraft and parts, motor vehicles and parts, motorcycles, bicycles and parts, baby carriages, Rickshaws, sleighs, wheelbarrows, carts, horse drawn carriages, bicycle trailers, adhesive rubber patches for repairing tubes and tires, air cushion vehicles.

Ð 289 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

JAPAN 06,08,09,15,16, 1375795 23/03/1979 23/03/2009 Headings in each Class. 18,19,20,21, 22,24,25,27, 28,31(I)

JAPAN 09,14(I) 1558074 24/12/1982 24/12/2002 Headings in each Class.

JAPAN 03,06,08,10,14, 1564684 25/02/1983 25/02/2003 Headings in each Class. 18,21,25,26(I)

JAPAN 01,02,05,08,09,16, 1406739 29/02/1980 28/02/2010 Headings in each Class. 17,24,27,34(I)

JAPAN 05,09,10,16,17,18, 862468 25/06/1970 25/06/2010 Headings in each Class. 20,21,22,24, 25,28(I)

JAPAN 06,08,10,14,18, 1489848 27/11/1981 In the process Headings in each Class. 21,25,26(I) of renewal

JAPAN 01,02,05,08,09,16, 2453113 30/09/1992 In the process Headings in each Class. 17,24,27,34(N) of renewal

JAPAN 14,34(N) 2322615 31/07/1991 31/07/2011 Headings in each Class.

JAPAN 08,09,15,16,18, 2312550 28/06/1991 28/06/2011 Headings in each Class. 19,20,21,22, 24,25,27,28, 31(I)

JAPAN 05,09,10,16,17,18, 2141247 30/05/1989 30/05/2009 Headings in each Class. 20,21,22,24, 25,28 (I)

JAPAN 25(I) 3231461 25/12/1996 25/12/2006 Non-Japanese style outer wear, coats, sweaters, shirts, nightwear, underwear, swimsuits, bathing caps, Japanese style clothing, aprons, collar protectors, socks, stockings, gaiters, fur stoles, shawls, scarves, tabi (Japanese socks), tabi covers, gloves, textile baby diapers, neckties, neckerchiefs, mufflers, ear muffs, hoods, sugegasa (Japanese sedge hats, night caps, helmets, hats, caps, shoes, boots, other than shoe dowels, shoe pegs, shoe handles, hobnails, metal pieces for protecting soles, shoe dowels, shoe pegs, shoe handles, hobnails, metal pieces for protecting soles, Japanese clogs, Japanese sandals.

Ð 290 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

JORDAN 16 (I) 49078 21/03/1998 21/03/2005 Paper, cardboard and goods made from these materials, not included in other classes, printed matter, book-binding materials, photographs, stationary, adhesives for stationary or household purposes, artists materials, paint brushes, typewriters and office requisites (except furniture), instructional and teaching material (except apparatus), plastic materials for packaging (not included in other classes) playing cards, printer type and printing blocks.

JORDAN 25(I) 49077 29/06/1996 29/06/2003 Clothing, footwear and headwear.

KOREA 35(N) 425355 16/10/1998 16/10/2008 Wrist watches, pocket watches, alarm clocks, table clocks, automobile clocks, stop watches, watch straps and watch bands.

KOREA 27(N) 35109 28/12/1973 28/12/2003 Shoes, sandals.

KOREA 45(N) 37433 08/06/1974 08/06/2004 Suits, coats, skirts, dresses, shorts, caps, necklaces, buttons, towels, undershirts, white shirts, sports shirts, polo shirts, swimming suits, t-shirts, sweaters, sports uniforms, pajamas and nightgowns, underpants, brassieres, chemises, swimming caps, slips, gloves, mufflers, helmets and suspenders.

KOREA 06,18,20,21, 64895 02/10/1979 02/10/2009 Tin cans, briefcases, handbags, backpacks, 22 (I) purses, boxes, covers for packing containers, bottles, bags, straw sacks.

KOREA 28 (I) 67546 31/01/1980 31/01/2010 Rackets, skateboards, surfboards, snowboards, skis, ski gloves, ski poles, cycling gloves.

KOREA 37(N) 379019 22/10/1997 22/10/2007 Bicycles and baby carriages.

KOREA 35(N) 375885 25/09/1997 25/09/2007 Wrist watches, alarm clocks, table clocks, electronic clocks and watches and watch bands.

KOREA 34(N) 383052 21/11/1997 21/07/2007 Spectacles, sunglasses, spectacle cases, spectacle frames, towels for glasses, swimming goggles.

Ð 291 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

KOREA 12(N) 361692 08/05/1997 08/05/2007 Perfume, skin lotion, suntan cream, bath oil, baby oil, sun oil, toilet oil and bath additives.

KOREA 06,18,20,21(I) 0064896 02/10/1979 02/10/2009 Tin cans, metal boxes, purses, backpacks, briefcases, handbags, leather closures for containers, plastic boxes, wooden boxes, covers for packing containers made of wood or plastic, acid resistant bottles, bottles for foods, ample bottles, beverage bottles, plastic bottles, bottles for cosmetics.

KOREA 28(I) 69931 01/07/1980 01/07/2010 Rackets, skateboards, surfboards.

KOREA 14,24,25,26(I) 63008 14/07/1979 14/07/2009 Necklaces, towels, hats, suits, skirts, dresses, shorts, sport shirts, undershirts, polo shirts, swimsuits, T- shirts, belts, socks, sweaters, buttons.

KOREA 25(N) 158719 30/08/1988 30/08/2008 Briefcases, handbags, trunks, suitcases, boston bags, knapsacks, purses, wallets, barrels, cans, drums, boxes, bottles and sacks.

KOREA 45(N) 161383 27/10/1988 27/10/2008 Formal wear, overcoats, skirts, evening dresses, shorts, hats and caps, necklaces, buttons, towels, undershirts, dress shirts, sports shirts, polo shirts, swimming suits, T-shirts, sweaters, sport uniforms, pajamas, nightgowns, belts, socks and stockings.

KOREA 27(N) 154732 24/05/1988 24/05/2008 Low shoes, boots, leather shoes, sport shoes, sandals, slippers, parasols, umbrellas, pans for personal use.

KOREA 27(N) 35110 28/12/1973 28/12/2003 Shoes, sandals, ski boots.

KOREA 45(N) 37434 08/06/1974 08/06/2004 Suits, coats, skirts, dresses, shorts, undershirts, dress shirts, sport shirts, swimming suits, T-shirts, sweaters, sport uniforms, pajamas, night gowns, belts, polo shirts, underpants, brassieres, chemisettes, swimming caps, slips, gloves, neck wrap, helmets, suspenders.

Ð 292 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

KOREA 43(N) 370866 29/07/1997 29/07/2007 Racquets, skateboards, surfboards, snowboards, skis, skiing poles, ski gloves and cycle gloves.

KOREA 45(N) 429969 18/11/1998 18/11/2008 Necklaces, earrings, bracelets, brooches, rings, necktie pins, badges, medals, buckles, insignia, dog tags, hairpins, pins used in clothes, armlets, anklets and belt ornaments.

KOREA 35(N) 375884 25/09/1997 25/09/2007 Wrist watches, alarm clocks, table clocks, electronic time keepers, and watch bands.

KOREA 34(N) 382679 19/11/1997 19/11/2007 Spectacles, swimming goggles, sunglasses, spectacle cases, spectacle frames, towels for glasses.

KOREA 12(N) 361691 08/05/1997 08/05/2007 Perfume, skin lotion, suntan cream, bath oil, baby oil, sun oil, toilet oil and bath additives.

KOREA 45(N) 255570 07/12/1992 07/12/2002 Trousers, shorts, skirts, children’s clothing, overcoats, sweaters, sport shirts, bathing suits, socks and hats and caps.

KOREA 14,24,25,26(I) 178320 06/09/1989 06/09/2009 14: Necklaces; 24: Towels; 25: Skirts, Korean pants, T-shirts, sweaters, socks, hats and caps, belts; 26: Buttons.

KOREA 16,18,28(I) 178972 18/09/1989 18/09/2009 16: Playing cards; 18: Saddles; 28: Metal toys, plastic toys, mascot dolls, diamond games and fishing rods.

KOREA 18,20,21(I) 182597 04/11/1989 04/11/2009 18: Umbrellas and canes; 20: fans; 21 Shoe brushes.

KUWAIT 25(I) 33782 27/12/1997 26/12/2007 Clothing, namely, tops, shirts, T-shirts, sweatshirts, sweatpants, sweaters, shorts, pants, slacks, jeans, dresses, skirts, jog suits, warm-up suits, swimwear, pajamas, underwear, hosiery, gloves, belts, coats, footwear, namely hats and caps.

LAOS 25(I) 4098 11/03/1996 29/05/2005 All goods in Class.

LEBANON 42(I) 76103 17/08/1996 17/08/2011 Retail and wholesale services.

MACAU 25(I) 1188-M 23/10/1987 23/10/2004 Swimwear, jackets and shirts.

Ð 293 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

MACAU 42(I) N/001812 27/08/1997 31/03/2004 Retail clothing store services.

MACAU 42(I) N/001410 28/05/1997 31/12/2003 Retail clothing store services.

MACAU 25(I) 1187-M 23/10/1987 23/10/2004 Bathing suits, coats and shirts.

MALAYSIA 25(I) M/062890 30/09/1974 11/07/2008 All goods in Class 25.

MALAYSIA 18(I) M/099425 16/10/1989 11/04/2004 Leather and imitations of leather, and articles made from these materials, and not included in other classes, skins, hides, trunk and traveling bags, tote bags, sports bags, utility bags, cosmetic bags, knapsacks, fobs and cards.

MALAYSIA 28(I) M/099424 22/04/1988 11/04/2004 Sporting articles including skateboards, surfboards, sailboards and other surf related sporting articles and sport racquets, sport balls and the like, gymnastic articles; games and playthings.

MALAYSIA 14(I) 95/07639 31/07/1995 In the process Precious metals and their alloys and goods of renewal in precious metals or coated therewith; Jewelery, watches, clocks, horological and chronometric instruments; parts and fittings for all the aforesaid goods; all included in Class 14.

MALAYSIA 25(I) 92008347 18/12/1995 26/11/2009 Dresses, skirts, blouses, jumpers, pajamas, nightgowns, robes, loungewear, shoes, sandals, boos, footwear, slips, undergarments, panties, sweatpants, sweatshirts, sweatsuits, performance wear, sportswear, ants and shirts, sweaters, t-shirts, swimwear, swimsuit, cover-ups, leotards, tights, socks, shorts, outwear, rainwear, overalls and headgear, hats, caps and visors; all included in Class 25.

MALAYSIA 14(I) 93/01137 09/05/2000 25/02/2010 Jewelry and chronometric instruments including watches, clocks and watch accessories; all included in Class 14.

MALAYSIA 18(I) 93/01138 09/05/2000 25/02/2010 Leather and imitations of leather, and goods made of these materials not included in other Classes; trunks and traveling bags; umbrellas and parasols; all included in Class 18. Ð 294 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

MAURITIUS 03,18,25,28(I) A/24 No. 349 10/02/1983 10/02/2004 All clothing products, including footwear; games, toys, and sporting goods; carrying bags and sports bags; cosmetics, including suntan products.

MEXICO 05,09,10,16,18, 226699 18/07/1979 15/08/2003 Hygienic diapers for incontinence and 21,25(I) belts for sanitary towels, protection clothing (such as helmets, glasses, eyeglasses), gloves for medical use, baby diapers made of paper, purses and animal clothing, gloves for cleaning, all kinds of clothing (excluding protection clothing and animal clothing.

MEXICO 18,22,24,27(I) 223272 20/03/1979 13/10/2003 Knitted, netted and textile fabrics, fabrics of imitation animal skins, tarpaulins and nets (with the exception of sporting goods for vehicles and for protection) and oiled fabric, knitted and textile products not covered in other classes; bed linen and table linen, carpets, artificial lawn, mats, plushy, entrance house cloths.

MEXICO 18,22(I) 223768 09/04/1979 13/10/2003 Only products made of pelt or animal leather (suitcases, valises, harnesses, mounts, portfolios and pocket wallets); only hemp bands.

MEXICO 01,06,08,09,11, 222799 06/03/1979 13/10/2003 Only sensitized paper, photographic paper, 12,14,16(I) heliographic film, film for the graphic arts, film for transparencies or slides; only signalizing panels (metallic) and vanes; only squares (and tools); only scientific, nautical, geodesic, photographic, cinematographic, optic, weighing, measuring, signalizing, control, life-saving and teaching apparatus, cash registers, calculating machines and computing equipment; only atomic piles and gas regulators; only air balloons and parachutes; only chronometrical instruments; instruction or teaching materials (with the exception of apparatus) and electrocardiographic paper.

Ð 295 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

MEXICO 18,22,24,27(I) 220277 24/11/1978 13/10/2003 Fabrics of imitation animal skins, tarpaulins and nets (with the exception of sporting goods for vehicles and for protection) and oiled fabric, knitted and textile products not comprised in other classes; bed linen and table linen, carpets, artificial lawn, mats, plushy, entrance house cloths.

MEXICO 05,09,10,16,18,21, 357929 26/05/1988 26/05/2003 Only hygienic diapers for incontinent and 25(I) belts for sanitary towels; only protection clothing (such as helmets, glasses, eyeglasses, etc.); only gloves for medical use; only baby diapers made of paper; only purses and animal clothing; only gloves for cleaning (domestic use); all kinds of clothing (excluding protection clothing and animal clothing.

MEXICO 18,22(I) 224754 22/05/1979 13/10/2003 Products made of pelt or animalleather (suitcases, valises, harnesses, mounts portfolios and pocket wallets); hemp bands.

MEXICO 01,06,08,09,11,12, 220273 24/11/1978 13/10/2003 Only sensitized paper, photographic paper, 14,16(I) heliographic film, film for the graphic arts, film for transparencies or slides; only signalizing panels (metallic) and vanes; only squares (and tools); only scientific, nautical, geodesic, photographic, cinematographic, optic, weighing, measuring, signalizing, control, life-saving and teaching apparatus, cash registers, calculating machines and computing equipment; only atomic piles and gas regulators; only air balloons and parachutes; only chronometrical instruments; instruction or teaching materials (with the exception of apparatus) and electrocardiographic paper.

MEXICO 25(I) 156674 01/06/1970 07/04/2010 Clothing, namely swimwear, jackets, shirts and sandals; all kinds of clothing (excluding protection clothing and animal clothing).

Ð 296 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

MEXICO 3(I) 612679 31/05/1999 22/04/2009 Bleaching preparations and other substances for laundry use; cleaning, polishing, scouring and abrasive preparations, soaps; perfumery, essential oils, cosmetics, hair lotions; dentifrices, including fragrances.

MEXICO 3(I) 614,159 22/06/99 22/04/2009 Bleaching preparations and other substances for laundry use; cleaning, polishing, scouring and abrasive preparations, soaps; perfumery, essential oils, cosmetics, hair lotions; dentifrices, including fragrances.

MONACO 25(I) 2R00.21094 28/01/75 28/01/2010 Clothes including shirts, swimming costumes, trousers, shawls, underclothes, dresses, nightwear, shorts, hats and bonnets, belts, boots, shoes and slippers.

MONACO 25(I) 2R00.21095 28/01/75 28/01/2010 Clothes including shirts, swimming costumes, trousers, shawls, underclothes, dresses, nightwear, shorts, hats and bonnets, belts, boots, shoes and slippers.

MOROCCO 25(I) 27.606 22/07/1977 05/06/2017 Clothing, including boots, shoes and (FRENCH slippers. ZONE)

MOROCCO 25(I) 4904 10/12/1986 In the process Clothing, including boots, shoes and (TANGIER of renewal slippers. ZONE)

MYANNMAR 25(I) 4930/1996 06/11/1996 06/11/2006 All goods included in Class 25.

NETHERLANDS 25(I) 10638 07/11/1978 26/05/2008 Clothing, footwear, underwear, gloves, ANTILLES headwear, belts, sporting goods luggage, purses and handbags, carrying bags, sunglasses and goggles, cosmetics and skin-care products, stationery products, small leather goods, gift items, handkerchiefs and linens.

Ð 297 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

NETHERLANDS 25(I) 10504 04/01/1988 01/12/2007 Clothing, footwear, hosiery, gloves, ANTILLES headwear, belts, sporting goods luggage, purses and handbags, carrying bags, sunglasses and goggles, cosmetics and skin-care products, stationery products, small leather goods, gift items, handkerchiefs and linens.

NEW 25(I) 94178 25/03/1975 06/07/2005 Articles of clothing including swimwear, ZEALAND excluding socks, stockings, hosiery, and other artificial of footwear.

NEW 25(I) B103227 19/09/1974 19/02/2008 Articles of clothing. ZEALAND

NEW 16(I) 115625 26/03/1980 14/05/2011 Stationery products, namely paper, ZEALAND notebooks, binders, folders, portfolios, memo pads, pencil pouches, and carriers for school items in this Class.

NEW 18(I) 119652 17/12/1979 01/06/2012 Carrying bags, tote bags and small leather ZEALAND goods such as wallets, purses, key fobs, shaving-article kits, patches and emblems.

NEW 28(I) 119653 17/12/1979 01/06/2012 Games and playthings, and gymnastic and ZEALAND sporting articles (except clothing).

NEW 25(I) B90886 03/08/1970 22/07/2004 Articles of clothing including swimwear. ZEALAND

NEW 16(I) 115624 29/07/1981 14/05/2011 Stationery products, namely paper, ZEALAND notebooks, binders, folders, portfolios, memo pads, pencil pouches, carriers for school items in this Class.

NEW 18(I) 119654 05/03/1980 01/06/2012 Carrying bags, tote bags and small leather ZEALAND goods such as wallets, purses, key fobs, shaving article kits, patches and emblems.

NEW 28(I) 119655 06/08/1980 01/06/2012 Games and playthings, gymnastic & ZEALAND sporting articles (except clothing) excluding surfboards, and hang gliders.

NEW 25(I) B105069 01/07/1976 23/07/2008 All goods in this Class. ZEALAND

NEW 24(I) 143399 01/01/1990 29/07/2003 Tissue (piece goods); bed and table ZEALAND covers.

NICARAGUA 25(I) 17,310 13/01/1987 12/01/2007 Clothing.

Ð 298 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

NICARAGUA 25(I) 43,427 28/04/2000 27/04/2010 Clothing.

NORWAY 25(I) 90500 07/03/1974 07/03/2004 Clothing, headwear and footwear. All goods in International Class 25.

NORWAY 03,09,14,16,18, 105086 14/05/1980 14/05/2010 All goods in the classes Ð cosmetics, 24,28(I) electrical and scientific apparatus including sunglasses, jewelry, paper goods and printed matter, leather goods, including bags, fabrics, including towels, clothing, toys and sporting goods.

NORWAY 03,09,14,16,18, 104829 17/04/1980 17/04/2010 All goods in the classes, cosmetics, 24,25,28(I) electrical and scientific apparatus including sunglasses, jewelry, paper goods and printed matter, leather goods, including bags, fabrics, including towels, clothing, toys and sporting goods.

PANAMA 25(I) 64765 27/10/1995 27/10/2005 Shirts, blouses, jackets, pants, shorts, skirts, dresses, hats and scarves and other headwear, hosiery, shoes and other footwear, bathing wear, vests, overalls, ties, sleepwear, loungewear, belts, gloves, and sporting and athletic garments.

PANAMA 25(I) 30745 24/07/1978 24/07/2008 Socks.

PANAMA 25(I) 16.895 25/10/1972 25/10/2002 Shoes, slippers and footwear for men, women and children.

PANAMA 25(I) 64,764 18/01/1996 18/01/2006 Shirts, blouses, jackets, pants, shorts, skirts, dresses, hats, scarves, socks, shoes and footwear in general, bathing clothes, vests, overalls, ties, sleepwear, loungewear, belts, gloves, sports and athletic clothing.

PAPUA NEW 25(I) A52834 02/06/1991 In the process All goods in this Class. GUINEA of renewal

PARAGUAY 25(I) 115,476 22/04/1996 25/07/2005 All goods in this Class (clothing, headwear and footwear).

PARAGUAY 25(I) 115.475 22/04/1996 25/07/2005 All goods in this Class (clothing, headwear and footwear).

Ð 299 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

PERU 25(I) 52,977 13/12/1982 13/12/2002 Clothing, dresses, underwear and outer garments, shoes, boots, sandals and everything in this Class.

PHILIPPINES 25(I) 58760 12/07/1994 12/07/2014 Clothing namely, vests, overalls, jumpsuits, cover-ups or shifts for wear over bathing suits and the like, loungewear, sleepwear, footwear, hosiery, headwear, belts, wetsuits and hoods, gloves and boots for wetsuits, scarves, ties and men’s and boys’ pants, shorts and jackets; bathing suits, jackets and shirts; and female attire, namely, shirts, dresses, skirts, pants, shorts and jackets.

PHILIPPINES 25(I) 58761 12/07/1994 12/07/2014 Clothing, namely, vests, overalls, jumpsuits, cover-ups or shifts for wear over bathing suits and the like, loungewear, sleepwear, footwear, hosiery, headwear, belts, wetsuits and hoods, gloves and boots for wetsuits, scarves, ties, jackets, and men’s and boys’ shirts, pants and shorts; garments for swimming including bathing suits, jackets and shirts; and women’s garments namely shirts, skirts, pants, dresses and short.

POLAND 25(I) 94041 28/01/1997 04/11/2004 Clothing, namely; tops/shirts, T-shirts, sweatpants, sweaters, shorts, pants/ slacks/jeans. dresses, skirts, jog and warm-up suits, swimwear, pajamas, underwear, hosiery, gloves, belts, coats, footwear; namely, beach footwear and athletic/casual footwear; headwear: namely, hats and caps.

PORTUGAL 25(I) 182,869 21/11/1978 05/2008 Bathing suits, coats and shirts.

PORTUGAL 18(I) 198,500 03/01/1986 09/2005 Leather and imitation leather goods; traveling bags and other bags for carrying articles; umbrellas and walking sticks.

PORTUGAL 24(I) 198,501 03/01/1986 09/2005 Towels and linens; bed and table covers; textile articles not included in other classes.

Ð 300 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

PORTUGAL 18(I) 198,498 03/01/1986 09/2005 Leather and imitation leather goods; traveling bags and other bags for carrying articles; umbrellas and walking sticks.

PORTUGAL 24(I) 198,499 03/01/1986 09/2005 Towels and linens; tissues (piece goods); bed and table covers; textile articles not included in other classes.

PORTUGAL 25(I) 182,868 22/11/1978 05/2008 Bathing suits, coats and shirts.

SABAH 25(I) 16,732 11/07/1973 11/07/2008 Articles of clothing.

SABAH 18(I) S/31919 11/04/1983 11/04/2004 Leather and imitations of leather, and articles made from these materials, and not included in other classes, skins, hides, trunks and traveling bags, tote bags, sports bags, utility bags, cosmetic bags, knapsacks, fobs and cards.

SABAH 28(I) S/31920 11/04/1983 11/04/2004 Sporting articles including skateboards, surfboards, sailboards and other surf related sporting articles and sport racquets, sport balls and the like, gymnastic articles; games and playthings.

SARAWAK 25(I) 12,123 07/08/1973 07/08/2008 All goods included in Class 25.

SARAWAK 18(I) 27,094 11/05/1983 11/05/2004 Leather and imitations of leather, and articles made form these materials, and not included in other classes, skins, hides, trunk and traveling bags, tote bags, sports bags, utility bags, cosmetic bags, knapsacks, fobs and cards.

SARAWAK 28(I) 27,093 11/05/1983 11/05/2004 Sporting articles including skateboards, surfboards, sailboards and other surf related sporting articles and sport racquets, sport balls and the like, gymnastic articles; games and playthings.

Ð 301 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

SAUDI 25(I) 392/67 12/01/1997 18/05/2005 Clothing, namely tops/shirts, sweatshirts, ARABIA Corporation sweaters, vests, shorts, short sets, pants/slacks, pants, sweatpants, jeans, overalls, rompers, skirts, jog./warm-up suits, swimwear, pajamas, nightgowns, robes, underwear, hosiery, slipper socks, scarfs, mittens, gloves, suspenders and belts; active outerwear, namely, shells, jackets and coats; footwear, namely breach footwear and athletic/casual footwear, slippers; headwear, namely hats, caps and visors in Class 25.

SEYCHELLES 25(I) 2,229 02/07/1983 02/07/2004 All clothing products, including boots, shoes and slippers.

SINGAPORE 25(I) T73/58,739A 03/09/1973 03/09/2004 Swimwear, footwear and hosiery, shirts and blouses, and slacks and sportswear being articles of clothing men, women and children.

SINGAPORE 14(I) T95/7707H 17/08/1995 17/08/2005 Jewelery, watches, clocks, horological and chronometric instruments, parts and fittings for all of the aforesaid goods; all included in Class 14.

SINGAPORE 25(I) T73/57982H 02/06/1973 02/06/2004 Shirts, shorts, trousers and jackets.

SINGAPORE 25(I) T73/58,740E 03/09/1973 03/09/2004 Swimwear, footwear and hosiery, shirts and blouses, jeans and slacks, and sportswear being articles of clothing for men, women and children.

SINGAPORE 18(I) T83/00438J 24/01/1983 24/01/2004 Holdalls, traveling bags, sport bags, toilet bags, tote bags; bags and cases included in Class 18; wallets, and small leather articles, all included in Class 18.

SINGAPORE 14(I) T93/01093F 16/02/1993 16/02/2003 Jewelry and chronometric instruments, watches, clocks and watch parts and fittings; all included in Class 14.

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SINGAPORE 18(I) T93/1092H 16/02/1993 16/02/2003 Trunks and traveling bags, sports bags, backpacks, fanny packs, waist packs, handbags, purses and umbrellas; all included in Class 18.

SINGAPORE 35(I) T93/1091Z 16/02/1993 13/02/2003 Business management and business organization, business consultancy in jewelry, chronometric instruments and leather and imitation leather goods; import and export agency services in the aforesaid goods; distribution of samples of the aforesaid goods; all included in Class 35.

SINGAPORE 25(I) T81/3184D 20/07/1988 20/07/2012 Shirts, shorts, swim wear, skiwear, jump suits, jogging suits, hats, sandals and hosiery.

SINGAPORE 28(I) T81/3185B 20/07/1988 20/07/2012 Surfboards, skis and skateboards.

SOUTH 03(I) 76/0565 04/02/1976 04/02/2006 Preparations for laundry use, bleaches, AFRICA cleaning, scouring and abrasive preparations; soaps, toiletries; perfumery; cosmetics; preparations for the hair; dentifrices; sun burn and sun tanning preparations; deodorants, deodorizers; anti-perspirants but excluding preparations for the feet.

SOUTH 14(I) 76/0566 04/02/1976 04/02/2006 Jewellery; watches and other horological AFRICA and chronometric instruments.

SOUTH 16(I) 76/0567 04/02/1976 04/02/2006 Paper and paper articles; cardboard AFRICA and cardboard articles; printed matter; newspaper; periodicals; books; photographs; posters; paint brushes; playing cards; stationery.

SOUTH 18(I) 76/0568 04/02/1976 04/02/2006 Leather and imitations of leather and AFRICA articles made from these materials; trunks; traveling bags; umbrellas; walking sticks; cases; handbags; bags; shoe straps; belts; straps.

SOUTH 24(I) 76/0159 14/01/1976 14/01/2006 Tissues (piece goods); bed and table AFRICA covers; blankets; towels and bath linen; cloths; textile articles not included in other classes.

SOUTH 25(I) B75/6686 12/12/1975 12/12/2005 All goods included in this Class. AFRICA

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SOUTH 28(I) 76/3599 14/07/1976 14/07/2006 Games and playthings; gymnastic and AFRICA sporting articles (except clothing); ornaments and decorations for Christmas trees.

SOUTH 42(I) 79/0408 26/01/1979 26/01/2009 Retail and wholesale distribution of AFRICA goods; stores; discount stores; supermarkets; boutiques; services relating to the design and manufacture of articles including the design and manufacture of cosmetics, toiletries, perfumery, jewellery, vehicles, paper and paper articles, articles of clothing, sportswear, sporting articles; hiring of clothing; photography and photographic services.

SOUTH 09(I) 85/8213 13/11/1985 13/11/2005 All goods in the Class. AFRICA

SOUTH 24(I) 76/0157 14/01/1976 14/01/2006 Tissues (piece goods); bed and table AFRICA covers; blankets; towels and bath linen; cloths; textile articles not included in other classes.

SOUTH 25(I) 76/0158 15/01/1976 15/01/2006 Articles of clothing including boots, AFRICA shoes and slippers.

SOUTH 28(I) 76/3598 14/07/1976 04/07/2006 Games and playthings; gymnastic and AFRICA sporting articles (except clothing); ornaments and decorations for Christmas trees.

SOUTH 42(I) 79/0407 26/01/1979 26/01/2009 Retail and supermarket trading services AFRICA for all kinds of goods, such as all kinds of women’s, men’s, children’s and infant’s clothing; footwear and jewelry, precious stones, clocks, and other chronometric instruments and all the aforementioned fittings thereof.

SOUTH 09(I) 85/8211 13/11/1985 13/11/2005 Scientific, nautical, surveying and AFRICA electrical apparatus and instruments (including wireless), photographic, cinematographic, optical, weighing, measuring signaling, checking (supervision), life-saving and teaching apparatus and instruments including cinematograph film, recorded cinematograph images and works, protective clothing, sunglasses,

Ð 304 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

spectacles, spectacle frames and contact lenses, diving and scuba-diving equipment, apparatus and suits including helmets, goggles and all other diving equipment; coin or counter-freed apparatus; talking machines; cash registers; calculating machines; fire-extinguishing apparatus; parts, components, fitting and accessories for all the aforegoing goods.

SOUTH 25(I) B67/1299 30/03/1967 30/03/2007 all goods included in Class 25. AFRICA

SOUTH 03(I) 76/0561 04/02/1976 04/02/2006 Preparations for laundry use, bleaches, AFRICA cleaning, scouring and abrasive preparations; soaps; toiletries; perfumery; cosmetics; preparations for the hair; dentifrices; sun burn and sun tanning preparations; deodorants, deodorizers; anti-perspirants.

SOUTH 14(I) 76/0562 04/02/1976 04/02/2006 Jewellery; watches and other horological AFRICA and chronometric instruments.

SOUTH 16(I) 76/0563 04/02/1976 04/02/2006 Paper and paper articles; cardboard and AFRICA cardboard articles; printed matter; newspapers; periodicals; books; photographs; posters; paint brushes; playing cards; stationery.

SOUTH 18(I) 76/0564 04/02/1976 04/02/2006 Leather and imitations of leather and AFRICA articles made form these materials; trunks; traveling bags; umbrellas; walking sticks; cases; handbags; bags; shoe straps; belts; straps.

SOUTH 09(I) 85/8212 13/11/1985 13/11/2005 Scientific, nautical, surveying and AFRICA electrical apparatus and instruments (including wireless), photographic, cinematographic, optical, weighing, measuring, signaling, checking (supervision)), life-saving and teaching apparatus and instruments including cinematograph film, recorded cinematograph images and works, protective clothing, sunglasses, spectacles, spectacle frames and contact lenses, diving and scuba-diving equipment, apparatus and suits

Ð 305 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

including helmets, goggles and all other diving equipment; coin or counterfreed apparatus; talking machines; cash registers; calculating machines; fire-extinguishing apparatus; parts, components, fittings and accessories for all the aforegoing goods.

SOUTH 12(I) 79/0406 26/01/1979 26/01/2009 Vehicles; apparatus for locomotion by AFRICA land, air or water including motor vehicles, trucks, beach buggies, pleasure vehicles, boats, yachts, sail boats, dinghies, catamarans, speed boats, ski boats, surf boards, sail boards, sail surf boards, trailers; parts and accessories for all the aforegoing.

TWO FEED SOUTH 42(I) 76/5910 24/11/1976 24/11/2006 Wholesale and retail services of all kinds; AHEAD AFRICA services in respect of chain stores, supermarkets, clothing and footwear chain stores and outlets.

SOUTH 09(I) 79/02854 05/06/1979 05/06/2009 Electrical apparatus and instruments, AFRICA photographic, cinematographic, optical, life-saving and teaching apparatus and instruments.

SOUTH 24(I) 79/2855 05/06/1979 05/06/2009 Tissues (piece goods); bed and table AFRICA covers; textile articles not included in other classes.

SOUTH 25(I) 88/1413 24/02/1988 24/02/2008 Clothing, including footwear, boots, shoes AFRICA and slippers.

SOUTH 25(I) 77/0752 23/02/1977 23/02/2007 Clothing, including boots, shoes and AFRICA slippers.

SOUTH 03(I) 90/3147 26/04/1990 26/04/2010 Soaps, shampoos, perfumery, toiletries AFRICA and essential oils; cosmetics; hair, skin and body lotions and preparations; deodorants and deodorizers, dentifrices.

SOUTH 16(I) 90/3148 26/04/1990 26/04/2010 Paper and paper articles, cardboard and AFRICA cardboard articles; printed matter, newspapers and periodicals, book; book-binding material; photographs; stationery, adhesive materials (stationery); artists’ materials; paint brushes; typewriters and office requisites (other than furniture);

Ð 306 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

instructional and teaching material (other than apparatus); playing cards; (printers’) type and cliches (stereotype).

SOUTH 18(I) 90/3149 26/04/1990 26/04/2010 Leather and imitations of leather and AFRICA articles made from these materials; bags, traveling bags, handbags, trunks, briefcases, attache cases luggage and holdalls.

SOUTH 28(I) 90/3150 26/04/1990 26/04/2010 Games and playthings; gymnastic and AFRICA sporting articles and equipment; toys; parts and accessories for the aforesaid.

SOUTH 25(I) 77/0752 23/02/1977 23/02/2007 Clothing, including boots, shoes and AFRICA slippers.

SOUTH 28(I) 77/0753 23/02/1977 23/02/2007 Games and playthings; gymnastic and AFRICA sporting articles (except clothing); ornaments and decorations for Christmas trees.

SOUTH 09(I) 79/2852 05/06/1979 05/06/2009 Electrical apparatus and instruments; AFRICA photographic, cinematographic, optical, life-saving and teaching apparatus and instruments.

SOUTH 24(I) 79/2853 05/06/1979 05/06/2009 Tissues (piece goods); bed and table AFRICA covers; textile articles not included in other classes.

SOUTH 14(I) 79/6282 23/11/1979 23/11/2009 Precious metals and their alloys and goods AFRICA in precious metals or coated therewith (except cutlery, forks and spoons); jewelery; precious stones; horological and other chronometric instruments.

SOUTH 03(I) 90/3151 26/04/1990 26/04/2010 Soaps, shampoos, perfumery, toiletries AFRICA and essential oils; cosmetics; hair, skin and body lotions and preparations; deodorants and deodorizers, dentifrices.

SOUTH 16(I) 90/3152 26/04/1990 26/04/2010 Paper and paper articles, cardboard and AFRICA cardboard articles; printed matter, newspapers and periodicals, book; book-binding material; photographs; stationery, adhesive materials (stationery); artists’ materials; paint brushes; typewriters and office requisites (other than furniture); instructional and teaching material

Ð 307 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(other than apparatus); playing cards; (printers’) type and cliches (stereotype).

SOUTH 25(I) 90/3153 26/04/1990 26/04/2010 Articles of clothing; footwear; headgear; AFRICA parts, accessories and accoutrements for the aforesaid.

SOUTH 16(I) 90/3145 26/4/1990 26/04/2010 Paper and paper articles, cardboard and AFRICA cardboard articles; printed matter, newspapers and periodicals, book; book-binding material; photographs; stationery, adhesive materials (stationery); artists’ materials; paint brushes; typewriters and office requisites (other than furniture); instructional and teaching material (other than apparatus); playing cards; (printers’) type and cliches (stereotype).

SOUTH 25(I) 77/0751 23/02/1977 23/02/2007 Clothing, including boots, shoes and AFRICA slippers.

SOUTH 09(I) 79/2850 05/06/1979 05/06/2009 Electrical apparatus and instruments; AFRICA photographic, cinematographic, optical, life-saving and teaching apparatus and instruments.

SOUTH 24(I) 79/2851 05/06/1979 05/06/2009 Tissues (piece goods); bed and table AFRICA covers; textile articles not included in other classes.

SOUTH 03(I) 90/3144 26/04/1990 26/04/2010 Soaps, shampoos, perfumery, toiletries AFRICA and essential oils; cosmetics; hair, skin and body lotions and preparations; deodorants and deodorizers, dentifrices.

SOUTH 25(I) 90/3146 26/04/1990 26/04/2010 Retail and supermarket trading services AFRICA for all kinds of goods, such as all kinds of women’s, men’s, children’s and infant’s clothing; footwear and jewelry, precious stones, clocks, and other chronometric instruments and all the aforementioned fittings thereof.

SOUTH 28(I) 90/7327 27/08/1990 27/08/2010 Games and playthings; gymnastic and AFRICA sporting articles and equipment; toys; parts, fittings, components and accessories for the aforegoing.

Ð 308 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

SOUTH 25(I) 89/6741 26/07/1989 26/07/2009 Clothing. AFRICA

TWO FEET SOUTH 42(I) 76/5910 24/11/1976 24/11/2006 Wholesale and retail services of AHEAD AFRICA all kinds; services in respect of chainstores, supermarkets, clothing and footwear chainstores and outlets.

SPAIN 25(I) 722293 29/12/1976 31/07/2003 Bathing suits, jackets, shirts, sandals, shoes, socks, skirts, trousers, dresses and shorts.

SPAIN 18(I) 877531 05/06/1979 08/05/2008 Leather and imitations of leather, and articles made from these materials not included in other classes; skins, hides; trunks and traveling bags; , umbrellas parasols and walking sticks; whips, harness and saddlery; bags; money bags and sport bags.

SPAIN 28(I) 877532 05/03/1979 08/05/2008 Games and playthings; gymnastic and sporting articles (except clothing); ornaments and decorations for Christmas trees.

SPAIN 35(I) 1319214 19/08/1991 18/09/2011 Advertising and business.

SPAIN 18(I) 877527 05/06/1979 08/05/2008 Leather and imitations of leather, and articles made from these materials not included in other classes; skins, hides; trunks and traveling bags; umbrellas, parasols and walking sticks; whips, harness and saddlery; bags; money bags and sport bags.

SPAIN 28(I) 877528 05/03/1979 08/05/2008 Games and plaything; gymnastic and sporting articles (except clothing); ornaments and decoration for Christmas trees.

SPAIN 25(I) 901323 05/09/1979 18/02/2009 Clothing, ready-made articles I general, including boots, shoes and slippers.

SPAIN 25(I) 722.292 26/07/1976 31/07/2003 Bathing suits, jackets, shirts, sandals, shores, socks, skirts, trousers, dresses and shorts.

SPAIN 14(I) 2099611 22/12/1997 18/06/2007 Precious metals and their alloys and articles made from these materials or plated not included in other classes; jewelry, jewellery, precious stones; horological instruments and chronometrical instruments.

Ð 309 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

SPAIN 25(I) 2437432 06/05/2002 14/11/2011 Clothing, footwear, headgear.

SPAIN 25(I) 2437430 06/05/2002 14/11/2011 Clothing, footwear, headgear.

SPAIN 25(I) 2437433 06/05/2002 14/11/2011 Clothing, footwear, headgear.

SPAIN 25(I) 2437431M8 06/05/2002 14/11/2011 Clothing, footwear, headgear.

SRI LANKA 25(I) 79412 12/07/1996 12/07/2006 Clothing, namely, tops/shirts, sweatshirts, vests, shorts sets, pants/slacks, pant sets, sweatpants, jeans, overalls, rompers, skirts, jog/warmup suits, swimwear, pajamas, nightgowns, robes, underwear, hosiery, slipper socks, scarves, mittens, gloves, suspenders and belts; active outerwear, namely, shells, jackets and coats; footwear, namely, beach footwear and athletic/ casual footwear, slippers; headwear, namely, hats, caps, visors.

SWAZILAND 25(I) 585/1999 23/11/1999 23/11/2009 Clothing, footwear, headgear; parts, accessories and accoutrements for the foregoing.

SWEDEN 3,9,14,16,18,24, 166,364 02/02/1979 02/02/2009 All goods in each Class. 25,28(I)

SWEDEN 3,9,14,16,18,24, 170,479 28/12/1979 28/12/2009 All goods in each Class. 25,28(I)

SWEDEN 14,25,28(I) 132,768 18/09/1970 18/09/2010 Jewelry, clothing and surfboards.

SWITZERLAND 3,9,14,16,18, 298,174 18/09/1970 22/09/2008 Washing and bleach; cleaning, polishing 24,25,28(I) preparations, fat removing agents and sharpening preparations; soaps; perfume shops, essential oils, body care products and beauty care, hair lotions, skin protection and skin tanning substances, lipsticks and ointments; photographs and filming apparatus, spectacles and sunglasses; scales; cash registers, calculating apparatus and machines; fire extinguishing apparatus; jewelry; clocks; paper, cardboard, paper and cardboard products, namely notebooks, folder and briefcases; adhesives and adhesive tapes; typewriters and office requisites; travel and valises, and bags, letter, money, tool and clock bags; cases for maps and for toilet articles; umbrellas, parasols and walking sticks;

Ð 310 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

whips, horse harnesses and saddlery; white goods, hand towels, handkerchiefs, bed covers and table linen; clothing, including boots, shoes and slippers; games; toys; gymnastics and sports articles, surfing boards and skateboards,; decorations for Christmas trees.

SWITZERLAND 3,9,14,16,18,24, 298,111 22/09/1978 22/09/2008 Washing and bleach; cleaning, polishing 25,28(I) preparations, fat removing agents and sharpening preparations; soaps; perfume shops, essential oils, body care products and beauty care, hair lotions, skin protection and skin tanning substances, lipsticks and ointments; photographs and filming apparatus, spectacles and sunglasses; scales; cash registers, calculating apparatus and machines; fire extinguishing apparatus; jewelry; clocks; paper, cardboard, paper and cardboard products, namely notebooks, folder and briefcases; adhesives and adhesive tapes; typewriters and office requisites; travel and valises, and bags, letter, money, tool and clock bags; cases for maps and for toilet articles; umbrellas, parasols and walking sticks; whips, horse harnesses and saddlery; white goods, hand towels, handkerchiefs, bed covers and table linen; clothing, including boots, shoes and slippers; games; toys; gymnastics and sports articles, surfing boards and skateboards,; decorations for Christmas trees.

SWITZERLAND 25,28(I) 305135 28/08/1980 23/10/2009 Clothing, including boots, shoes and slippers; games, toys; gymnastics and sports articles; decorations for Christmas trees.

SWITZERLAND 25,28(I) 305134 28/08/1980 23/10/2009 Clothing, including boots, shoes and slippers; games; toys; gymnastics and sports articles; decorations for Christmas trees.

TAIWAN 38(N) 44,655 01/01/1971 31/12/2010 Various kinds of clothing, collars, swimwears, beach coats, beach shirts, T-shirts, slacks, sweaters, vests, pants, skirts, jeans, sportswear. Ð 311 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

TAIWAN 3(I) 842606 16/03/1999 15/03/2009 Cosmetics, hair creams, hair lotions, hair waters, hair oils, hair wax, hair sprays, color hair gels, hair styling gels, hair treatment preparations, mousse, hair shining waters, facial creams, cold creams tonic lotions, skin oils, skin creams, pearl creams, perfumes, perfumed oils, perfumed creams, perfumed essences, pen perfumes, colognes, toilet water, lotions, rouge powders, powder bars, cream powders, pancakes, face pressed powder, pressed powder compact, perfumed powders, face powders for finishing, white powders, blush, rouges, lipsticks protective oils for lips, color-change lipsticks, foundation creams, massage creams, peel-off creams, cleansing creams, cleansing lotions, hand creams, hand lotions, eye shadow creams, eyeshadow pencils, cream eye-liners, eye pencils, mascaras, eyelash wax, removing creams for eye make-up, suntan oils, suntan creams, anti- wrinkle creams, vanishing creams, whitening creams, exfoliation scrub creams, whitening skin creams, perfumed oils for bathing, bathing oils, nail polishes, nail bases, protective liquids for nails, dusting powders prickly heat powders, baby powders, shaving lotions, before-shaving lotions, after-shaving lotions, shaving creams, shaving foams, face shaving creams, haircut lotions, deodorants, eyebrow pencils, false eyelashes, false nails for decoration purposes, nail polish removers, cuticle lotions, puffs for cosmetic purposes, depilatories for human body; false hair adhesives; false adhesives; perm lotions, curling and strengthening lotions; hair dyes, hair dyeing fixatives, whitening preparations for hair use, hair bleaching preparations; cleansers for human body, perfumed soaps, medicated soaps, facial soaps, paper perfumed soaps, cleaning facial

Ð 312 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

creams, cleaning facial lotions, bathing lotions, soaking preparations for bathing, bathing gels, bath salts, skin cleansers, skin cleansing preparation, shampoos, anti-dandruff shampoos, cream shampoos, powdered shampoos, hair conditioners, rinse, detergents for clothing, bathrooms and kitchens, laundry powders, laundry creams, laundry lotions, soap floss, collar cleansers, cleansers, dishwashing liquids, powdered detergents, liquid detergents, cleansers for kitchen greasy dirts, fabric softeners, dry clean powders for carpets, cleansers for feeding bottles, cleansers for removing clothing mildewed spots, cleansers for clothes stains, cleansers for bathrooms, tile cleansers, waterpipe cleansers, drain openers for toilets and water pipes, cleansers for floors and carpets, cleaning bleach, cleansers for jewelry, soaps; polish wax, polish powder, polish water, floor wax, car wax, polish preparations for furniture, polish preparations for metals, oils for rubbing coppers, fog-proof preparations, fog-proof preparations for glasses, fog-proof preparations for bathroom mirrors, fog-proof preparations for car and motorcycle windshield, fog-proof preparations for reverse mirrors, polish preparations for glass, shinning preparations for glass; spray protective preparations; wax- removing liquid; cleansers, not for use in manufacturing process; essential oils, perfumery oils, almond oils, banana oils, vanilla oils, lemon oils, orange skin oils, natural flower extracts, perfumed fruit extracts, perfumed lemon extracts, perfumed mandarin orange extracts, perfumed almond extracts, synthetic perfumery, flavoring materials, for tobacco, cosmetic perfumery, artificial perfumery, perfumery for hair wax, perfumery for hair gel, candy flavoring

Ð 313 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

materials, edible flavoring materials, flavoring materials for drinks, cigarette flavoring materials; chemical preparations for enhancing lens perviousness and insulation rate; tea bath bags; cleaning fluids for turntable needles, cleaning fluids for tape recorder magnetic heads, cleaning fluids for magnetic disks; toothpaste, dental powder, dental water, dentifrices, mouthwash, denture cleansers, tooth salt, tooth whitening bars, tooth washing preparations for professional use; leather oil, leather fluid, shoe powder, shoe water, shoe oil, shoe cream, leather cleanser, shoe polish preparations incense, incense powder, ring incense, aloe, incense for worship, coiled incense, aloe oil, sandalwood oil, abrasive preparations, pumice stones, sand paper, sand paper strips, emery cloth strips; rust removing preparations, paint removing preparations, drying agents, anti-static preparations; animal cosmetics and washes (non-medicated).

TAIWAN 35(I) 112366 16/07/1999 15/07/2009 Retail stores for clothing, accessories of clothing, shoes, suitcases and handbags, umbrellas, bedding, cosmetics, sporting articles and equipment, toys amusement articles, glasses, clocks and watches; department store.

TAIWAN 35(I) 112365 16/07/1999 15/07/2009 Retail stores for clothing, accessories of clothing, shoes, suitcases and handbags, umbrellas, bedding, cosmetics, sporting articles and equipment, toys amusement articles, glasses, clocks and watches; department store.

TAIWAN 3(I) 845223 01/04/1999 15/03/2009 Cosmetics, hair creams, hair lotions, hair waters, hair oils, hair wax, hair sprays, color hair gels, hair styling gels, hair treatment preparations, mousse, hair shining waters, facial creams, cold creams, tonic lotions, skin oils, skin creams, pearl creams, perfumes,

Ð 314 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

perfumed oils, perfumed creams, perfumed essences, pen perfumes, colognes, toilet water, lotions, rouge powders, powder bars, cream powders, pancakes, face pressed powder, pressed powder compact, perfumed powders, face powders for finishing, white powders, blush, rouges, lipsticks, protective oils for lips, color-change lipsticks, foundation creams, massage creams, peel-off creams, cleansing creams, cleansing lotions, hand creams, hand lotions, eye shadow creams, eye shadow pencils, cream eye-liners, eye pencils, mascaras, eyelash wax, removing creams for eye make-up, suntan oils, suntan creams, anti- wrinkle creams, vanishing creams, whitening creams, exfoliation scrub creams, whitening skin creams, perfumed oils for bathing, bathing oils, nail polishes, nail bases, protective liquids for nails, dusting powders, prickly heat powders, baby powders, shaving lotions, before-shaving lotions, after-shaving lotions, shaving creams, shaving foams, face shaving creams, haircut lotions, deodorants, eyebrow pencils, false eyelashes, false nails for decoration purposes, nail polish removers, cuticle lotions, puffs for cosmetic purposes, depilatories for human body; false hair adhesives; false eyelash adhesives; perm lotions, curling and strengthening lotions; hair dyes, hair dyeing fixative, whitening preparations for hair use, hair bleaching preparations; cleansers for human body, perfumed soaps, medicated soaps, facial soaps, paper perfumed soaps, cleaning facial creams, cleaning facial lotions, bathing lotions, soaking preparations for bathing, bathing gels, bath salts, skin cleansers, skin cleaning preparations, shampoos, anti-dandruff shampoos, cream shampoos, powdered shampoos, hair conditioners, rinse; detergents for

Ð 315 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

clothing, bathrooms and kitchens, laundry powders, laundry creams, laundry lotions, soap floss, collar cleansers, cleansers, dishwashing liquid, powdered detergents, liquid detergents, cleansers for kitchen greasy dirts, fabric softeners, dry clean powders for carpets, cleansers for feeding bottles, cleansers for removing clothing mildewed sports, cleansers for clothes stains, cleansers for bathrooms, tile cleansers, waterpipe cleansers, drain openers for toilets and waterpipes, cleansers for floors and carpets, cleaning bleach, cleansers for jewellery, soaps; polish wax, polish powder, polish water, floor wax, car wax, polish preparations for furniture, polish preparations for metals, oils for rubbing copper, fog-proof preparations, fog-proof preparations for glasses, fog- proof preparations for bathroom mirrors, fog-proof preparations for car and motorcycle windshield, fog-proof preparations for reverse, polish preparations for glass, shinning preparations for glass; spray protective preparations; wax-removing liquid; cleansers, not for use in manufacturing process; essential oils, perfumery oils, almond oils, banana oils, vanilla oils, lemon oils, orange skin oils, natural flower extracts, perfumed fruit extracts, perfumed lemon extracts, perfumed mandarin orange extracts, perfumed almond extracts, synthetic perfumery, flavoring materials for tobacco, cosmetic perfumery, artificial perfumery, perfumery for hair wax, perfumery for hair gel, candy flavoring materials, edible flavoring materials, flavoring materials for drinks, cigarette flavoring materials; chemical preparations for enhancing lens preciousness and insulation rat; tea bath bags; cleaning fluids for turntable needles, cleaning fluids for tape recorder magnetic heads, cleaning

Ð 316 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

fluids for magnetic disks; toothpaste, dental powder, dental water, dentifrices, mouthwash, denture cleansers, tooth salt, tooth whitening bars, tooth washing preparations for professional use; leather oil, leather fluid, shoe powder, shoe water, shoe oil, shoe cream, leather cleanser, shoe polish preparations, incense, incense powder, ring incense, aloe, incense for worship, coiled incense, aloe oil, sandalwood oil; abrasive preparations, pumice stones, sand paper, sand paper strips, emery cloth strips; rust- removing preparations, paint removing preparations, drying agents, anti-static preparations; animal cosmetics and washes (non-medicated).

TAIWAN 38(N) 44656 01/01/1971 31/12/2010 Various kinds of clothing, collars, swimwears, beach coats, beach shirts, T-shirts, slacks, sweaters, vests, pants, skirts, jeans, sportswear.

TAIWAN 41(N) 279378 16/04/1985 15/04/2005 Towels, bath towels, handkerchiefs, cleaning cloths, mufflers, napkins, table cloths, towels for pillow, scarves, hoods, diapers.

TAIWAN 40(N) 484546 16/05/1990 15/05/2010 Clothing.

TAIWAN 41(N) 482,082 16/04/1990 15/04/2010 Boots, shoes.

TAIWAN 3(I) 842541 16/03/1999 15/03/2009 Cosmetics, hair creams, hair lotions, hair waters, hair oils, hair wax, hair sprays, color hair gels, hair styling gels, hair treatment preparations, mousse, hair shining waters, facial creams, cold creams, tonic lotions, skin oils, skin creams, pearl creams, perfumes, perfumed oils, perfumed creams, perfumed essences, pen perfumes, colognes, toilet water, lotions, rouge powders, powder bars, cream powders, pancakes, face pressed powder, pressed powder compact, perfumed powders,

Ð 317 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

face powders for finishing, white powders, blush, rouges, lipsticks, protective oils for lips, color-change lipsticks, foundation creams, massage creams, peel-off creams, cleansing creams, cleansing lotions, hand creams, hand lotions, eye shadow creams, eye shadow pencils, cream eye-liners, eye pencils, mascaras, eyelash wax, removing creams for eye make-up, suntan oils, suntan creams, anti- wrinkle creams, vanishing creams, whitening creams, exfoliation scrub creams, whitening skin creams, perfumed oils for bathing, bathing oils, nail polishes, nail bases, protective liquids for nails, dusting powders, prickly heat powders, baby powders, shaving lotions, before-shaving lotions, after-shaving lotions, shaving creams, shaving foams, face shaving creams, haircut lotions, deodorants, eyebrow pencils, false eyelashes, false nails for decoration purposes, nail polish removers, cuticle lotions, puffs for cosmetic purposes, depilatories for human body; false hair adhesives; false eyelash adhesives; perm lotions, curling and strengthening lotions; hair dyes, hair dyeing fixative, whitening preparations for hair use, hair bleaching preparations; cleansers for human body, perfumed soaps, medicated soaps, facial soaps, paper perfumed soaps, cleaning facial creams, cleaning facial lotions, bathing lotions, soaking preparations for bathing, bathing gels, bath salts, skin cleansers, skin cleaning preparations, shampoos, anti-dandruff shampoos, cream shampoos, powdered shampoos, hair conditioners, rinse; detergents for clothing, bathrooms and kitchens, laundry powders, laundry creams, laundry lotions, soap floss, collar cleansers, cleansers, dishwashing liquid, powdered detergents, liquid detergents, cleansers for kitchen greasy

Ð 318 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

dirts, fabric softeners, dry clean powders for carpets, cleansers for feeding bottles, cleansers for removing clothing mildewed sports, cleansers for clothes stains, cleansers for bathrooms, tile cleansers, waterpipe cleansers, drain openers for toilets and waterpipes, cleansers for floors and carpets, cleaning bleach, cleansers for jewellery, soaps; polish wax, polish powder, polish water, floor wax, car wax, polish preparations for furniture, polish preparations for metals, oils for rubbing copper, fog-proof preparations, fog-proof preparations for glasses, fog- proof preparations for bathroom mirrors, fog-proof preparations for car and motorcycle windshield, fog-proof preparations for reverse, polish preparations for glass, shinning preparations for glass; spray protective preparations; wax-removing liquid; cleansers, not for use in manufacturing process; essential oils, perfumery oils, almond oils, banana oils, vanilla oils, lemon oils, orange skin oils, natural flower extracts, perfumed fruit extracts, perfumed lemon extracts, perfumed mandarin orange extracts, perfumed almond extracts, synthetic perfumery, flavoring materials for tobacco, cosmetic perfumery, artificial perfumery, perfumery for hair wax, perfumery for hair gel, candy flavoring materials, edible flavoring materials, flavoring materials for drinks, cigarette flavoring materials; chemical preparations for enhancing lens preciousness and insulation rat; tea bath bags; cleaning fluids for turntable needles, cleaning fluids for tape recorder magnetic heads, cleaning fluids for magnetic disks; toothpaste, dental powder, dental water, dentifrices, mouthwash, denture cleansers, tooth salt, tooth whitening bars, tooth washing preparations for professional use; leather oil, leather

Ð 319 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

fluid, shoe powder, shoe water, shoe oil, shoe cream, leather cleanser, shoe polish preparations, incense, incense powder, ring incense, aloe, incense for worship, coiled incense, aloe oil, sandalwood oil; abrasive preparations, pumice stones, sand paper, sand paper strips, emery cloth strips; rust- removing preparations, paint removing preparations, drying agents, anti-static preparations; animal cosmetics and washes (non-medicated).

TAIWAN 35(I) 112173 16/07/1999 15/07/2009 Retail stores for clothing, accessories of clothing, shoes, suitcases and handbags, umbrellas, bedding, cosmetics, sporting articles and equipment, toys, amusement articles, glasses, clocks and watches; department store.

TAIWAN 47(N) 69912 01/06/1974 31/05/2004 Hosiery, panty hose, socks.

TAIWAN 93(N) 271154 16/01/1985 15/01/2005 Keyholders.

TAIWAN 37(N) 503948 01/11/1990 15/04/2005 Towels, bath towels, handkerchiefs, cleaning cloths, mufflers, napkins, table cloths, towels for pillow, scarves, hoods, diapers.

TAIWAN 43(N) 483052 01/05/1990 30/04/2010 Book satchels, attache cases, suitcases, handbags, traveling bags and wallets.

TAIWAN 44(N) 638765 01/04/1994 31/03/2004 Umbrellas, parasols, stick and hand fans.

TAIWAN 78(N) 477402 01/03/1990 28/02/2010 Surfboards, toys for children. Sporting games & amusement articles.

TAIWAN 25(I) 711366 16/03/1996 31/12/2010 Clothing; headwear, namely, hats, caps and visors; footwear, namely, athletic footwear, casual and dress footwear, beach footwear, sandals, slippers and boots; socks and hosiery; scarves bandannas; belts; suspenders; neck ties; anti-cold gloves, gloves for clothing use.

TAIWAN 14(I) 723754 01/09/1996 31/07/2006 Jewelry, precious stones, watches, watch bands, watch caps, clocks, horological and chronometric instruments.

Ð 320 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

TAIWAN 48(N) 267029 16/12/1984 15/12/2004 Boots, shoes, sandals.

TAIWAN N-43 258676 01/10/1984 30/09/2004 Hats and caps. (Old Class)

TAIWAN 40(N) 546547 01/01/1992 In the process Clothing. of renewal

TAIWAN 78(N) 477402 16/09/1980 28/02/2010 Surfboards, toy for children.

TAIWAN 40(N) 626170 01/01/1994 31/12/2003 Clothing.

TAIWAN 50(N) 211832 16/05/1983 15/05/2003 Book satchels, attache cases, suitcases, handbags.

TAIWAN 41(N) 213982 16/06/1983 15/06/2003 Towels, bath towels, handkerchiefs, cleaning cloths, diapers.

TAIWAN 48(N) 217905 01/08/1983 31/07/2003 Boots, shoes.

TAIWAN 43(N) 223275 01/10/1903 30/09/2003 Hats and caps.

TAJIKISTAN 25(I) 96003734 24/07/1996 24/07/2006 Clothing, footwear, headgear and all goods included in Class 25.

THAILAND 25(I) 6284 13/09/1973 12/09/2003 Shirts, pants, shorts, swimwear, jackets, jog/warm-up suits, inner pants and boxers’ trunks, socks, shoes, sandals and hats.

THAILAND 18(I) 85542 30/10/1997 29/10/2007 Untanned or semi-tanned leather, imitations of leather, animal skins, hides; trunks and traveling bags; umbrellas, parasols; walking sticks; cases, luggage, wallets and backpacks; harness and saddlery.

THAILAND 25(I) 6285 13/09/1973 12/09/2003 Shirts, pants, shorts, swimwear, jackets, jog-warm-up suits, briefs and boxer shorts, socks, shoes, sandals and hats.

THAILAND 25(I) 114507 09/04/1990 08/04/2010 Shoes (not including sport shoes), socks, hats, cloth hoods.

THAILAND 25(I)) 120004 02/08/1990 01/08/2010 Shirts for men, ladies and children; sweaters, underwear, shorts, skirts, swimsuits, hats, suits, sportswear.

THAILAND 25(I) 114375 09/04/1990 08/04/2010 Shoes (not including sport shoes), socks, hats, cloth hoods.

Ð 321 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

THAILAND 25(I) 144971 24/07/1991 23/07/2011 Suits, shirts, trousers, shorts, hats, neckties, shirts for children, pants for children, scarves, gloves, brassieres, caps, socks, shoes.

TUNISIA 25(I) EE96.0737 13/06/1996 13/06/2011 Clothes, footwear, headgear; and all the goods classified in this Class.

TUNISIA 25(I) EE92.0855 18/08/1992 18/08/2007 Garments including boots, shoes and slippers.

TURKEY 24,25(I) 83,932 27/01/1975 27/01/2005 Clothing for women, men and children, night-dresses, sport dresses, jackets over-coats, hats and caps, sweaters and shorts, jackets like montogomeris, blouses, pullovers, dresses, wears, pyjamas, morning- dresses, dressing gowns, flannels, shirts, slips, brassieres, bathing-suits, towels, bath dress, towels, bath jackets made of towels, belts, socks and stockings, shoes, top-boots and slippers.

TURKEY 24,25(I) 83,933 27/01/1975 27/01/2005 Clothing for women, men and children’s, suits, trousers, night-dresses, sport dresses, jackets, coats and over-coats, hats and caps, sweaters and shirts, shorts, jackets like montgomeries, blouses, pullovers, dresses, night gown, pyjamas, morning, dresses, robe de chamber, flannels, shirts, slips, brassieres, swimming suits, bath robes, towels, bath jackets made of towels, girdle and belts, socks and stockings, shoes, high-boots and slippers.

UKRAINE 25(I) 12723 19/07/1999 18/11/2004 All goods in International Class 25.

UNITED 25(I) 9319 20/03/1996 20/03/2006 Clothing, namely tops-shirts, sweatshirts, ARAB sweaters, vests, shorts, shorts sets, EMIRATES pants/slacks, pants sets, sweatpants, jeans, overalls, rompers, skirts, jog/ warm-up suits, swimwear, pajamas, night gowns, robes, underwear, hosiery, slipper socks, scarfs, mittens, gloves, suspenders and belts; active outerwear, namely, shells, jackets and coats; footwear, namely beach footwear and athletic/casual footwear, slippers; headwear, namely, hats, caps and visors.

Ð 322 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

UNITED 25(I) B962389 13/07/1970 13/07/2005 Clothing, namely, shorts, jackets, shirts, KINGDOM all for beachwear; swimwear being articles of clothing.

UNITED 25(I) 900404 13/10/1966 13/10/2011 Clothing, namely, shorts, jackets, shirts KINGDOM and shoes, all for beachwear; swimwear being articles of clothing.

UNITED 25(I) B1014,798 24/07/1973 24/07/2008 Bathing suits, bikinis, sunsuits, jackets, KINGDOM shirts trousers, shorts, skirts, dresses, socks (for wear), shoes and sandals.

UNITED 25(I) B1453376 21/01/1991 21/01/2008 Articles of outer clothing; shirts; T-shirts, KINGDOM singlets; jackets; shorts, trousers; skirts; overcoats; waistcoats; ties; belts; beachwear; swimwear; tracksuits; scarves; mittens, gloves; hosiery; shoes, sandals; hats and caps; wetsuits; skisuits; all included in Class 25.

UNITED 25(I) B1342535 25/04/1988 25/04/2005 Articles of outer clothing; shirts; T-shirts, KINGDOM singlets; jackets; shorts, trousers; overcoats; waistcoats; ties; belts; beachwear; swimwear; tracksuits; scarves; mittens, gloves; hosiery; sandals; hats and caps; wetsuits; skisuits; all included in Class 25.

UNITED 28(I) B1342536 25/04/1988 25/04/2005 Toys, games and playthings; gymnastic KINGDOM and sporting articles; surfing articles; skateboards, skiing articles; windsurfers; parts and fittings for all the aforesaid goods; all included in Class 28; but not including strings for tennis rackets, badminton rackets and squash rackets and goods of the same description as these excluded goods.

UNITED 25(I) 1342537 25/04/1988 25/04/2005 Articles of outer clothing, shirts, KINGDOM t-shirts, singlets, jackets, shorts, trousers, overcoats, waistcoats, ties, belts; beachwear, swimwear, tracksuits; hosiery, hats and caps; wetsuits, skisuits; all included in Class 25; but not including footwear and not including any such goods for use in sports.

Ð 323 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

UNITED 28(I) B1099662 02/08/1978 02/08/2009 Toys, games (other that ordinary laying KINGDOM cards, and playthings, gymnastic and sporting articles (Other than clothing), skateboards and parts and fittings included in Class 28 for all the aforesaid goods.

UNITED 28(I) 2,140,941 03/03/1998 03/03/2008 Surfboards, skateboards, snowboards, STATES water skis, wakeboards, kneeboards, bodyboards, in Class 28.

UNITED 25(I) 877,451 23/09/1969 23/09/2009 Bathing suits, jackets and shirts, STATES in Class 25.

UNITED 25(I) 982,289 16/04/1974 16/04/2004 Female attire, namely, shirts, dresses, STATES skirts, pants, shorts and jackets, in Class 25.

UNITED 25(I) 982,290 16/04/1974 16/04/2004 Socks, in Class 25. STATES

UNITED 03(I) 1,078,711 06/12/1977 06/12/2007 Cosmetic and toiletry products, namely, STATES after-shave lotion and skin bracer, in Class 3.

UNITED 35(I) 2,205,789 24/11/1998 24/11/2008 Retail stores featuring food, beverages, STATES clothing and clothing accessories, in Class 35.

UNITED 35(I) 2,205,788 24/11/1998 24/11/2008 Retail stores featuring food, beverages, STATES clothing and clothing accessories, in Class 35.

UNITED 28(I) 2,139,079 24/02/1998 24/02/2008 Surfboards, skateboards, snowboards, STATES water skis, wakeboards, kneeboards, bodyboards, in Class 28.

UNITED 25(I) 779,097 27/10/1964 27/10/2004 Garments for swimming, including STATES bathing suits, jackets and shirts in Class 39.

UNITED 25(I) 808,565 17/05/1966 17/05/2006 Sandals, in Class 39. STATES

UNITED 28(I) 811,306 19/07/1966 19/07/2006 Surfboards, in Class 22. STATES

UNITED 03(I) 1,078,710 06/12/1977 06/12/2007 Cosmetic and toiletry products, namely, STATES after-shave lotion and skin bracers, in Class 3.

UNITED 09,14,16,18, 1,107,860 05/12/1978 05/12/2008 Sunglasses, jewelry, stationary products, STATES 24,25(I) namely, paper, notebooks, binders and portfolios, tote bags and utility bags, small leather goods, namely, wallets, fobs, card and toiletry cases, towels,

Ð 324 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

clothing, namely, vests, overalls, jumpsuits, cover-ups or shifts, for wear over bathing suits, and the like, loungewear, sleepwear, footwear, hosiery, headwear, belts, wet suits, and hoods, gloves and boots for wet suits, scarves, ties, jackets, skateboards and skateboard parts.

UNITED 25(I) 2,205,322 24/11/1998 24/11/2008 Clothing, namely, tops/shirts, t-shirts, STATES sweatshirts, sweatpants, sweaters, shorts, pants, slacks, jeans, dresses, skirts, jog warm-up suits, swimwear, pajamas, underwear, hosiery, gloves, belts, coats, footwear, namely, beach footwear, athletic and casual footwear, headwear, namely, hats and caps in Class 25.

UNITED 14(I) 2,220,279 26/01/1999 26/01/2009 Jewelry, watches and clocks, in Class 14. STATES

UNITED 28(I) 1,033,976 17/02/1976 17/02/2006 Skateboards, in Class 28. STATES

UNITED 39(N) 098306 17/11/1993 17/11/2003 Clothing, shirts, sweaters, shorts, etc. STATES (CA)

UNITED 39(N) 098243 21/10/1993 21/10/2003 Clothing, namely tops-shirts, sweatshirts, STATES sweaters, vests, shorts, short sets, (CA) pants/slacks, pant sets, sweatpants, jeans, overalls, catsuits, skirts, jumpers, dresses.

UNITED 28(I) 2,220,842 26/01/1999 26/01/2009 Surfboards, windsurfing boards, STATES skateboards, kneeboards, wakeboards, skimboards, snow skis, snow ski poles, water skis, volleyballs, and toys, namely, board games, toy cars, beach balls, kites and windsocks.

UNITED 25(I) 1,050,724 19/10/1976 19/10/2006 Clothing-namely, shirts and swim shorts, STATES in Class 25.

UNITED 25(I) 1,100,840 29/08/1978 29/08/2008 Clothing - namely, knit, woven and STATES screen print shirts; surf , ski and swimwear; men’s and boys’ hosiery; women’s jumpsuits, shorts, and shirts in Class 25.

UNITED 25(I) 1,115,687 27/03/1979 27/03/2009 Sandals, in Class 25. STATES

Ð 325 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

UNITED 18(I) 1,274,339 17/04/1984 17/04/2004 Wallets, backpacks, handbags, duffle bags, STATES and luggage bags of nylon, imitation leather and canvas, in Class 18.

UNITED 25(I) 1,703,371 28/07/1992 28/07/2012 Clothing; namely, tops/shirts, sweatshirts, STATES sweaters, vests, shorts, short sets, pants/slacks, pants sets, sweatpants, jeans, overalls, rompers, skirts, jog- warm-up suits, swimwear, pajamas, underwear, hosiery, slipper socks, scarfs, mittens, gloves, sock suspenders, suspenders, belts; active outerwear; namely, shells, jackets, coats; and skiwear; namely, tops, bottoms, jackets, overalls, full suits; footwear; namely, beach footwear and athletic/casual footwear; headwear; namely, hats and caps, in Class 25.

UNITED 28(I) 1,095,649 11/07/1978 11/07/2008 surfboard accessories Ð namely, surfboard STATES wax (paraffin), in Class 4.

UNITED 25,28(I) 1,099,609 15/08/1978 15/08/2018 Clothing Ð namely, knit, woven and STATES screen print shirts, swimwear, and hosiery - men’s and boys’ Ð in Class 25.

UNITED 25,28(I) 1,058,516 08/02/1977 08/02/2007 Shirts and swim shorts, in Class 25. STATES

UNITED 24(I) 1,733,141 17/11/1992 17/11/2002 Towels, in Class 24. STATES

UNITED 09(I) 1,965,442 02/04/1996 02/04/2006 Photographic instruments and equipment, STATES namely reproducing and film cameras for taking and reproducing photographs;; water-proof and under- water cinematographic, reproducing and film cameras for taking and reproducing photographs, in Class 9.

UNITED 18(I) 1,274,340 17/04/1984 17/04/2004 Wallets, backpacks, handbags, duffle bags, STATES and luggage bags of nylon, imitation leather and canvas, in Class 18.

UNITED 25(I) 1,305,144 03/11/1984 03/11/2004 Clothing Ð namely, T-shirts, in Class 25. STATES

UNITED 25(I) 1,463,650 03/11/1987 03/11/2007 Men’s and boy’s sportswear, namely, STATES surfer shorts, in Class 25.

UNITED 25(I) 1,495,887 12/07/1988 12/07/2008 Sportswear, namely, surfer shorts and STATES T-shirts, in Class 25.

Ð 326 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

UNITED 25(I) 1,512,808 15/11/1988 15/11/2008 Sportswear, namely, surfer shorts and STATES T-shirts, in Class 25.

UNITED 25(I) 1,742,341 22/12/1992 22/12/2002 Clothing; namely, tops/shirts, sweatshirts, STATES sweaters, vests, shorts, short sets, pants/slacks, pants sets, sweatpants, jeans, overalls, rompers, skirts, jog- warm-up suits, swimwear, pajamas, underwear, hosiery, slipper socks, scarfs, mittens, gloves, sock suspenders, suspenders, belts; active outerwear; namely, shells, jackets, coats; skiwear; namely, tops, bottoms, jackets, overalls, and full suits; footwear; namely, beach footwear and athletic/casual footwear; headwear; namely, hats and caps, in Class 25.

URUGUAY 18,25(I) 212.442 30/06/1986 23/12/2006 Bags, clothing.

URUGUAY 16,18,20,21,22,23, 209.356 28/11/1985 18/08/2006 Stationery, bags, furniture, household 24,25,26(I) containers, ropes and nets, yarn and thread, towels, clothing, lace.

URUGUAY 09(I) 241700 08/01/1991 In the process All goods in this Class of renewal (Sunglasses).

URUGUAY 2,3,6,7,8,16,17, 247120 30/08/1991 27/04/2012 Paints, cosmetics, metals, machines, 18,20,21,22, handtools, stationery, rubber goods, 23,24,25,26, bags, building materials, household 28(I) containers, ropes, yarns and threads, towels, clothing, lace, games and sporting articles.

VENEZUELA 28(I) 86.179-F 15/02/1978 15/02/2003 Playthings, sporting goods and games.

VENEZUELA 28(I) 86.152-F 14/02/1978 14/02/2003 Playthings, sporting goods and games.

VIETNAM 25(I) 14 040 02/11/1994 22/02/2004 Clothing, headwear and footwear.

VIETNAM 25(I) 14 102 03/11/1994 22/02/2004 Clothing, headwear and footwear.

YEMEN 25(I) 8361 28/12/1997 02/11/2006 Clothing, namely tops/shirts, sweatshirts, sweaters, vests, shorts, shorts sets, pants/slacks, pants sets, sweatpants, jeans, overalls, rompers, skirts, jog- warm-up suits, swimwear, pajamas, nightgowns, robes, underwear, hosiery, slipper socks, scarfs, mittens, gloves, suspenders and belts; active outerwear, namely, shells, jackets and coats; Ð 327 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

footwear, namely, beach footwear and athletic/casual footwear, slippers; headwear, namely, hats, caps and visors.

ZIMBABWE 25(I) 330/74 15/05/1974 15/05/2008 Bathing suits and bathing trunks, jackets included in Class 25, shirts, shoes, socks, shorts and pants for males and females.

ZIMBABWE 25(I) 876/71 21/03/1975 21/03/2004 Clothing but excluding boots and shoes.

ZIMBABWE 25(I) 329/74 15/05/1974 15/05/2008 Bathing suits and bathing trunks, jackets included in Class 25, shirts, shoes, socks, shorts and pants for males and females.

Ð 328 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

As at the Latest Practicable Date, the Hang Ten Group had applied for the registration of the following marks, the registration of which has not yet been granted :

Specimen Class (note: of the (I) = international Application mark as Place of Class; (N) = Application Date applied for Application national Class) Number d/m/y Product/Services Covered

BHUTAN 25 (I) 01622 15/04/1999 Clothing, headwear and footwear.

BOLIVIA 25 (I) 8949 18/08/1998 All goods in this Class (Clothing).

OZZY BRAZIL 10,25 (I) 816365504 Clothing and accessories.

HANG TEN INDIA 18 (I) 846831 22/03/1999 Leather bags, leather and imitations of leather; goods made of these materials and not included in other classes but falling in Class 18 and all other goods falling in Class 18.

INDIA 18 (I) 846830 22/03/1999 Leather bags, leather and imitations of leather; goods made of these materials and not included in other classes but falling in Class 18 and all other goods falling in Class 18.

INDIA 25 (I) 650298 29/12/1994 Clothing, footwear and headgear and other goods falling in Class 25.

INDONESIA 42 (I) J96 25541 19/11/1996 Retail and supermarket trading services for all kinds of goods, such as all kinds of women’s, men’s, children’s and infant’s clothing; footwear and jewelry, precious stones, clocks, and other chronometric instruments and all the aforementioned fittings thereof.

HANG TEN INDONESIA 42 (I) J96 25543 19/11/1996 Retail and supermarket trading services for all kinds of goods, such as all kinds of women’s, men’s, children’s and infant’s clothing; footwear and jewelry, precious stones, clocks, and other chronometric instruments and all the aforementioned fittings thereof.

INDONESIA 42 (I) J96 25542 19/11/1996 Retail and supermarket trading services for all kinds of goods, such as all kinds of women’s, men’s, children’s and infant’s clothing; footwear and jewelry, precious stones, clocks, and other chronometric instruments and all the aforementioned fittings thereof.

Ð 329 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

Specimen Class (note: of the (I) = international Application mark as Place of Class; (N) = Application Date applied for Application national Class) Number d/m/y Product/Services Covered

IRAQ 25 (I) 35657 25/05/1997 Clothing, namely tops-shirts, sweatshirts, sweaters, vests, shorts, shorts sets, pants’/slacks, pants sets, sweatpants, jeans, overalls, rompers, skirts, jog/ warm-up suits, swimwear, pajamas, nightgowns, robes, underwear, hosiery, slipper, socks, scarfs, mittens, gloves, suspenders and belts; active outerwear, namely, shells, jackets and coats; footwear, namely, beach footwear and athletic/casual footwear, slippers; headwear, namely, hats, caps and visors.

LIGHTNING MALAYSIA 25 (I) 8346/92 26/11/1992 Dresses, skirts, blouses, jumpers, pajamas, BOLT nightgowns, robes, loungewear, casual and dressy shoes, sandals, boots, rubber boots, infants’ footwear, slips, undergarments, panties, sweatpants, sweatshirts, sweatsuits, performance wear, and sportswear, namely, pants and shirts, sweaters, printed t-shirts, swimwear, swimsuit cover-ups, leotards, tights, socks, shorts, outerwear, rainwear, overalls and headgear, namely hats, caps and visors.

OMAN 25 (I) 15174 16/02/1997 Clothing, namely tops-shirts, sweatshirts, sweaters, vests, shorts, shorts sets, pants/slacks, pants sets, sweatpants, jeans, overalls, rompers, skirts, jog/ warm-up suits, swimwear, pajamas, nightgowns, robes, underwear, hosiery, slipper, socks, scarfs, mittens, gloves, suspenders and belts; active outerwear, namely, shells, jackets and coats; footwear, namely, beach footwear and athletic/casual footwear, slippers; headwear, namely, hats, caps and visors.

PAKISTAN 25 (I) 121281 08/04/1993 Clothing, headwear and footwear.

HANG TEN PAKISTAN 25 (I) 121282 08/04/1993 Clothing, headwear and footwear.

HANG TEN PHILIPPINES 42 (I) 4-1997-111328 03/01/1997 Retail services for clothing.

PHILIPPINES 42 (I) 4-1998-005284 20/07/1998 Retail store establishment selling food, beverages and/or clothing and accessory items.

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Specimen Class (note: of the (I) = international Application mark as Place of Class; (N) = Application Date applied for Application national Class) Number d/m/y Product/Services Covered

PHILIPPINES 42 (I) 4-1997-111327 03/01/1997 Retail services for clothing.

PHILIPPINES 18 (I) 4-1998-000173 12/01/1998 All goods in this Class.

PHILIPPINES 14 (I) 4-1997-123953 25/08/1997 Jewelry, watches, clocks and horological and chronometric instruments.

PHILIPPINES 25 (I) 127173 10/12/1997 Clothing- namely knit, woven and screen print shirts, surf, ski and swimwear, means and boys hosiery, women’s jumpsuits, shorts and shirts.

PHILIPPINES 25 (I) 127175 10/12/1997 Clothing Ð namely, knit, woven and screen print shorts Ð swimwear and hosiery Ð mens and boys.

LIGHTNING PHILIPPINES 25 (I) 127174 10/12/1997 Clothing: namely, tops/shirts, sweatshirts, BOLT sweaters, vests, shorts, shorts sets, pants/slacks, pants sets, sweatpants, jeans, overalls, rompers, skirts, job/ warm-up suits, swimwear, pajamas, underwear, hosiery, slipper socks, scarves, mittens, gloves, sock suspenders, suspenders, belts, active outerwear; namely, shells, jackets, coats and skiwear; namely, tops, bottoms, jackets, overalls, full suits, footwear; namely, beach footwear, and athletic/casual footwear, headwear; namely, hats and caps.

QATAR 25 (I) 14454 14/01/1996 Clothing, namely tops/shirts, sweatshirts, sweaters, vests, shorts, shorts sets, pants/slacks, pants sets, sweatpants, jeans, overalls, rompers, skirts, jog/ warm-up suits, swimwear, pajamas, nightgowns, robes, underwear, hosiery, slipper socks, scarfs, mittens, gloves, suspenders and belts; active outerwear, namely shells, jackets and coats; footwear, namely beach footwear and athletic/casual footwear, slippers; headwear, namely hats, caps and visors.

LIGHTNING SAUDI ARABIA 25 (I) 50021 07/07/1999 Apparel, accessories, footwear and BOLT headwear.

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Specimen Class (note: of the (I) = international Application mark as Place of Class; (N) = Application Date applied for Application national Class) Number d/m/y Product/Services Covered

SYRIA 25 (I) 5710 10/05/1979 Clothing, namely tops-shirts, sweatshirts, sweaters, vests, shorts, shorts sets, pants/slacks, pants sets, sweatpants, jeans, overalls, rompers, skirts, jog/ warm-up suits, swimwear, pajamas, nightgowns, robes, underwear, hosiery, slipper, socks, scarfs, mittens, gloves, suspenders and belts; active outerwear, namely, shells, jackets and coats; footwear, namely, beach footwear and athletic/casual footwear, slippers; headwear, namely, hats, caps and visors.

SYRIA 42 (I) 8384 08/02/1998 Retail store establishments.

THAILAND 14 (I) 339699 28/07/1997 Rings, necklaces, earrings, bracelets, watches and clocks.

H10 UNITED 25 (I) 78/154,131 14/08/2002 Clothing, headwear and footgear including STATES men’s, women’s and children’s shirts, T-shirts, pants, shorts, skirts, shoes, caps and hats.

UNITED 32 (I) 78/125,883 02/05/2002 Clothing, headwear and footgear including STATES men’s, women’s and children’s shirts, T-shirts, pants, shorts, skirts, shoes, caps and hats.

HANG TEN UNITED 25 (I) 78/091,234 01/11/2001 Clothing, footwear and headgear. AN AMERICAN STATES ORIGINAL

LIGHTNING URUGUAY 25 (I) 307.488 29/09/1998 Clothing BOLT

Ð 332 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

FURTHER INFORMATION ABOUT DIRECTORS, STAFF AND EXPERTS

9. Disclosure of interests

Immediately following Closing but taking no account of the Hang Ten Shares that are issued on conversion of the CPS held by the Investors or exercise of the Warrants, the interests of the Directors and chief executive in the equity or debt securities of Hang Ten or any associated corporations (within the meaning of the SDI Ordinance) which will have to be notified to Hang Ten and the Stock Exchange pursuant to section 28 of the SDI Ordinance (including interests which they are taken or deemed to have under section 31 of, or Part I of the Schedule to, the SDI Ordinance) once Hang Ten Shares are listed, or which will be required, pursuant to section 29 of the SDI Ordinance, to be entered in the register referred to therein once Hang Ten Shares are listed, or which will be required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies in the Listing Rules, to be notified to Hang Ten and the Stock Exchange once Hang Ten Shares are listed, will be as follows:

Number of Hang Ten Shares Name of Personal Family Corporate Other Director interests interests interest interests Total (million Shares) (million Shares) (million Shares) (million Shares) (million Shares)

Chan Wing Sun ÐÐÐÐÐ Kenneth Hung 800 Ð Ð Ð 800 Wang Li Wen 200 Ð Ð Ð 200 Kao Yu Chu 200 Ð Ð Ð 200

Number of CPS Name of Personal Family Corporate Other Director interests interests interest interests Total

Chan Wing Sun ÐÐÐÐÐ Kenneth Hung 282 Ð Ð Ð 282 Wang Li Wen 70 Ð Ð Ð 70 Kao Yu Chu 70 Ð Ð Ð 70

Number of Warrants Name of Personal Family Corporate Other Director interests interests interest interests Total (million Warrants) (million Warrants) (million Warrants) (million Warrants) (million Warrants)

Chan Wing Sun ÐÐÐÐÐ Kenneth Hung 160 Ð Ð Ð 160 Wang Li Wen 40 Ð Ð Ð 40 Kao Yu Chu 40 Ð Ð Ð 40

Ð 333 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

So far as the Directors are aware, and taking no account of Hang Ten Shares which may be issued on conversion of the CPS held by the Investors or exercise of the Warrants, the following (not being Directors or the chief executive of Hang Ten) will, immediately following Closing, be interested in 10% or more of the voting power at general meetings of members of the Hang Ten Group:

Number of Name Hang Ten Shares Percentage of holding (million Shares)

Asian Wide 12,600 46.5%

YGM Trading Limited 5,000 18.5%

10. Related party transactions

During the three years ended 31 March 2000, 2001 and 2002, the Hang Ten (BVI) Group conducted certain transactions with related parties, details of which are set out in note 30 of section B of the accountants’ report as shown in Appendix II to this document. Some of these transactions, which are set out in the section headed “Continuing connected transactions” in the letter from the board of directors of Hang Ten, will continue following Closing and therefore will constitute connected transactions for Hang Ten under the Listing Rules upon the listing of the Hang Ten Shares on the Stock Exchange.

11. Particulars of service contracts

Mr. Chan Wing Sun, the Chairman of Hang Ten, has entered into a service agreement with Hang Ten for a term of two years commencing from 1 December 2002. His employment under the service agreement is conditional upon the Hang Ten Shares being listed on the Stock Exchange on or before 31 December 2002. Pursuant to his service agreement, Mr. Chan Wing Sun is entitled to a fixed remuneration of HK$2,200,000 per year payable quarterly in arrears commencing from 1 December 2002.

Each of Mr. Kenneth Hung, Ms. Wang and Ms. Kao, being executive Directors, has entered into a service agreement with Hang Ten. Subject to the Hang Ten Shares being listed on the Stock Exchange on or before 31 December 2002, their employment will commence with effect from 1 December 2002 and will continue thereafter until terminated by not less than three months’ notice in writing served by either party on the other. Pursuant to their service agreements, each of Mr. Kenneth Hung, Ms. Wang and Ms. Kao is entitled to a fixed remuneration of HK$10,000 per year payable yearly in arrears commencing from 1 December 2002.

Mr. Kwong Chi Keung, being one of the independent non-executive Directors, has entered into a service agreement with Hang Ten on a monthly basis commencing from 25 October 2002. Pursuant to his service agreement, Mr. Kwong Chi Keung is entitled to a fixed remuneration of HK$20,000 per month payable monthly in arrears commencing from 25 October 2002.

Mr. So Hon Cheung, Stephen, being one of the independent non-executive Directors, has entered into a service agreement with Hang Ten for an initial term of one year commencing from 1 December 2002 which will continue thereafter for further successive periods of one year, provided that Hang Ten

Ð 334 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED may terminate the service agreement at any time after 1 December 2002 by not less than one month’s notice in writing. The engagement of Mr. So Hon Cheung, Stephen under his service agreement is conditional upon the Hang Ten Shares being listed on the Stock Exchange on or before 31 December 2002. Pursuant to his service agreement, Mr. So Hon Cheung, Stephen is entitled to a fixed remuneration of HK$20,000 per month payable monthly in arrears commencing from 1 December 2002.

Mr. Kenneth Hung has entered into a service agreement with ILC to serve as the managing director of the ILC Group. Subject to the Hang Ten Shares being listed on the Stock Exchange on or before 31 December 2002, his employment under this service agreement will commence with effect from 1 December 2002 for a period of three years which may be renewed to beyond that three year period on such terms as Mr. Kenneth Hung and ILC may agree. If (i) ILC does not give notice in writing of its intention not to renew this agreement; or (ii) agreement as to such terms has not been reached by the date falling three months before the expiry of the term of the agreement, the service agreement will be deemed to continue for a further period of one year, provided that the fixed remuneration payable per month for that further one year shall be the amount of fixed remuneration payable per month for the preceding year increased by 10%. The provisions on renewal and extension described above will continue to apply unless otherwise agreed between the parties.

Pursuant to the service agreement between Mr. Kenneth Hung and ILC, Mr. Kenneth Hung is entitled to a fixed remuneration at the following rates:

(a) US$15,000 per month payable monthly in arrears commencing from 1 December 2002 to 30 November 2003;

(b) US$16,500 per month payable monthly in arrears commencing from 1 December 2003 to 30 November 2004; and

In addition, in respect of each of the four consecutive financial years of the ILC Group ending 31 March 2003, 31 March 2004, 31 March 2005 and 31 March 2006, Mr. Kenneth Hung is entitled to an amount of bonus equal to 3% of the audited consolidated net profits of the ILC Group for that financial year, adjusted to exclude any provision for taxation, amortisation of any goodwill or intangible assets and any profit sharing or other remuneration paid or payable by reference to the profits of the ILC Group to any other director of the ILC Group.

Each of Ms. Wang and Ms. Kao has entered into a service agreement with Hang Ten Enterprises Limited, a subsidiary of ILC, to serve as an executive director of Hang Ten Enterprises Limited and its subsidiaries. Each of their employment under these service agreements commenced with effect from 1 April 2001 for a period of three years which may be renewed to beyond that three year period on such terms as they may respectively agree with Hang Ten Enterprises Limited. In respect of each such agreement, if (i) Hang Ten Enterprises Limited does not give notice in writing of its intention not to renew the agreement; or (ii) agreement as to such terms has not been reached by the date falling three months before the expiry of the term of the agreement, the service agreement will be deemed to continue for a further period of one year, provided that the remuneration payable per month for that further one year shall be the amount of remuneration payable per month for the preceding year increased by 5%. The

Ð 335 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED provisions on renewal and extension described above will continue to apply unless otherwise agreed between the parties.

Pursuant to the service agreements entered into by Ms. Wang and Ms. Kao respectively with Hang Ten Enterprises Limited, each of Ms. Wang and Ms. Kao is entitled to a fixed remuneration at the following rates:

(a) US$6,000 per month payable monthly in arrears commencing from 1 April 2001 to 31 March 2002;

(b) US$6,300 per month payable monthly in arrears commencing from 1 April 2002 to 31 March 2003; and

Each of Ms. Wang and Ms. Kao has entered into a service agreement with Hang Ten Enterprises Limited, Taiwan Branch to serve as assistant general managers of administration and finance and sales operation respectively. Each of their employment under these service agreements commenced with effect from 1 April 2001 for a period of three years which may be renewed to beyond that three year period on such terms as they may respectively agree with Hang Ten Enterprises Limited, Taiwan Branch. In respect of each such agreement, if (i) Hang Ten Enterprises Limited, Taiwan Branch does not give notice in writing of its intention not to renew the agreement; or (ii) agreement as to such terms has not been reached by the date falling three months before the expiry of the term of the agreement, the service agreement will be deemed to continue for a further period of one year, provided that the remuneration payable per annum for that further one year shall be the amount of remuneration payable per annum for the preceding year increased by 5%. The provisions on renewal and extension described above will continue to apply unless otherwise agreed between the parties.

Pursuant to the service agreements entered into by Ms. Wang and Ms. Kao respectively with Hang Ten Enterprises Limited, Taiwan Branch, Ms. Wang and Ms. Kao are entitled to fixed salaries at the rates of NT$2,160,000 and NT$2,640,000 per annum respectively payable monthly in arrears. In addition, the board of directors of Hang Ten Enterprises Limited will review their salaries yearly and may increase their salaries by such amounts as it thinks fit, provided that the amount of such increment shall not be less than 5% of the salary payable for the preceding year, and a bonus may be given on an annual basis subject to the discretion of the board of directors.

Save as aforesaid, none of the Directors has or is proposed to have a service contract with Hang Ten or any of its subsidiaries (other than contracts expiring or determinable by the employer within one year without the payment of compensation (other than statutory compensation)) and the remuneration of the Directors will not be affected by the Proposal.

12. Directors’ remuneration

(i) During the year ended 31 March 2002, the aggregate emoluments paid by the Hang Ten (BVI) Group to the Directors was approximately US$0.364 million.

Ð 336 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(ii) Under the arrangements currently in force, the aggregate emoluments to be paid by the Hang Ten (BVI) Group to the Directors for the year ending 31 March 2003 will be approximately US$0.47 million.

13. Disclaimers

Save as disclosed on pages 46, 47, 259 to 264, 266 to 267, 333 to 336 of this document:

(a) none of the Directors or chief executive of Hang Ten has any interest in the equity or debt securities of Hang Ten or any of its associated corporation (within the meaning of the SDI Ordinance) which will have to be notified to Hang Ten and the Stock Exchange pursuant to section 28 of the SDI Ordinance (including interests which he will be taken or deemed to have under section 31 of, or Part I of the Schedule to, the SDI Ordinance) once Hang Ten Shares are listed, or which will be required, pursuant to section 29 of the SDI Ordinance, to be entered in the register referred to therein once Hang Ten Shares are listed, or which will be required to be notified to Hang Ten and the Stock Exchange pursuant to the Model Code for Securities Transaction by Directors of Listed Companies in the Listing Rules once Hang Ten Shares are listed;

(b) none of the Directors or experts referred to under the paragraph headed “Consents of experts” in this Appendix has any direct or indirect interest in the promotion of Hang Ten, or in any assets which have within the two years immediately preceding the date of this document been acquired or disposed of by or leased to any member of the Hang Ten Group, or are proposed to be acquired or disposed of by or leased to any member of the Hang Ten Group;

(c) none of the Directors, the Akai Directors or experts referred to under the paragraph headed “Consents of experts” in this Appendix is materially interested in any contract or arrangement subsisting at the date of this document which is significant in relation to the business of the Hang Ten Group taken as a whole;

(d) none of the Directors has any existing or proposed service contracts with any member of the Hang Ten Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation));

(e) the Directors are not aware of any person (not being a Director or chief executive of Hang Ten) who will, immediately following Closing but prior to conversion of the CPS issued to the Investors or exercise of the Warrants, be interested, directly or indirectly, in 10 per cent. 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 Hang Ten Group or in any options in respect of such capital;

(f) none of the experts referred to under the paragraph headed “Consents of experts” in this Appendix has any shareholding in any member of the Hang Ten Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Hang Ten Group;

Ð 337 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(g) none of Akai, the directors of Akai, the Subsidiaries of Akai, pension funds of Akai or of any of its Subsidiaries, or associate of Akai or adviser to Akai as specified under class (2) of the definition of associate in the Code has any interest in Hang Ten Shares, shares in YGM or Akai Shares otherwise than pursuant to the Proposal and they have not dealt in Akai Shares, Hang Ten Shares or shares in YGM during the Relevant Period;

(h) save for (i) the allotment of 10,000,000 shares of HK$0.01 each in Hang Ten to Mr. Kenneth Hung as disclosed in the section headed “Changes in the share capital of Hang Ten” in this appendix; (ii) save for the Hang Ten Shares to be acquired by the Investors, the Other Investors and the Designated Person pursuant to the Proposal; (iii) 613,000 shares in YGM held by Mr. Dennis Kung, 26,000 shares in YGM held by Mr. Kenneth Hung, 12,000 shares in YGM held by Mr. Peggy Hung and 10,200 shares in YGM held by Ms. Pamela Hung; and (iv) the shares in YGM held by Mr. Chan Wing Sun, an executive Director, and his associates (as defined in the Listing Rules) as disclosed in paragraph (q) in the section headed “Miscellaneous” in this appendix, none of Hang Ten (BVI), Hang Ten, their respective directors nor any persons acting in concert with Hang Ten, has any interest in Akai Shares, Hang Ten Shares or shares in YGM otherwise than pursuant to the Proposal and they have not dealt in Akai Shares, Hang Ten Shares or shares in YGM during the Relevant Period;

(i) no person who has an arrangement of the kind referred to in note 8 to Rule 22 of the Code with Hang Ten or Hang Ten (BVI) or any person acting in concert with any of them had any interest in Hang Ten Shares, shares in YGM or Akai Shares and they have not dealt in Hang Ten Shares, shares in YGM or Akai Shares during the Relevant Period;

(j) no person who has an arrangement of the kind referred to in note 8 to Rule 22 of the Code with Akai or with any person who is an associate of Akai by virtue of classes (1) to (4) of the definition of associate in the Code had any interest in Hang Ten Shares, shares in YGM or Akai Shares and they have not dealt in Akai Shares, Hang Ten Shares or shares in YGM during the Relevant Period;

(k) no fund managers connected with Akai have any interest in Akai Shares, Hang Ten Shares or shares in YGM which are managed on a discretionary basis during the Relevant Period and they have not dealt for value in any Akai Shares, Hang Ten Shares or shares in YGM during the Relevant Period;

(l) there is no arrangement or indemnity of the kind described in Note 8 to Rule 22 of the Code in relation to Hang Ten (BVI), Hang Ten or Akai;

(m) no persons who have, prior to the posting of this document, irrevocably committed themselves to accept or reject the securities exchange offer made pursuant to the Scheme had any interest in Akai Shares, shares in YGM or Hang Ten Shares and none of them had dealt in any Akai Shares, shares in YGM or Hang Ten Shares during the Relevant Period;

(n) the Akai Shares were suspended from trading on the Stock Exchange on 23 August 2000 and the last, highest and lowest closing market price of Akai Shares during the Relevant Period is $0.026 per Akai Share; Ð 338 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(o) save pursuant to the terms of the Scheme, Hang Ten or Hang Ten (BVI) does not intend to avail itself of any powers of compulsory acquisition; and

(p) save as disclosed in the section headed “Changes in the share capital of Hang Ten”, Hang Ten has not issued or repurchased any shares since 31 March 2002, being the end of the last financial year of the Hang Ten Group, up to the Latest Practicable Date.

14. Share Option Scheme

(a) Purpose of the scheme

The following sets out all the terms of the Share Option Scheme conditionally approved by a written resolution of the sole shareholder of Hang Ten on 24 October 2002. The purpose of the Share Option Scheme is to provide incentives or rewards to participants thereunder for their contribution to the Hang Ten Group and/or to enable the Hang Ten Group to recruit and retain high- calibre employees and attract human resources that are valuable to the Hang Ten Group and any Invested Entity.

The Share Option Scheme permits Hang Ten to grant Options to a wide category of participants as described in the section below. Under the rules of the Share Option Scheme, the Directors have discretion to set a minimum period for which an Option has to be held before the exercise of the subscription rights attaching thereto. This discretion allows the Directors to provide incentive to a participant under the Share Option Scheme to remain as such a participant during the minimum period and thereby enable the Hang Ten Group or the relevant Invested Entity to continue to benefit from the services of such participant during such period. This discretion, coupled with the power of the board of Directors to impose any performance target as it considers appropriate before any Option can be exercised, enable the Hang Ten Group to provide incentives to the participants to use their best endeavours in assisting the growth and development of the Hang Ten Group. Although the Share Option Scheme does not provide for the granting of Options with right to subscribe for Hang Ten Shares at a discount to the trading price of such shares on the Stock Exchange, the Directors are of the view that the flexibility given to the board of Directors in granting Options to participants under the Share Option Scheme and to impose minimum period for which the Options have to be held and performance targets that have to be achieved before the Options can be exercised, will place the Hang Ten Group in a better position to attract human resources that are valuable to the growth and development of the Hang Ten Group as a whole.

The Directors consider that it is not appropriate to state the value of all the Options that can be granted under the Share Option Scheme as if they had been granted at the Latest Practicable Date prior to the approval of the Share Option Scheme given that the variables which are critical for the calculation of the value of such Options cannot be determined. The variables which are critical for the determination of the value of such Options include the subscription price for the Hang Ten Shares upon the exercise of the subscription right attaching to the Options, whether or not Options will be granted under the Share Option Scheme, and the timing of the granting of the Options, the period during which the subscription rights may be exercised, the discretion of the board of Directors to impose any performance target that has to be achieved before the subscription rights attaching to the Options can be exercised and any other conditions that the board of Directors

Ð 339 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

may impose in relation to the Options and whether or not the Options if granted will be exercised by the grantees. The subscription price payable for the Hang Ten Shares depends on the price of Hang Ten Shares as quoted on the Stock Exchange, which in turn depends on when the board of Directors is to grant Options under the Share Option Scheme. With a scheme life of ten years, the board of Directors is of the view that it is too premature to state whether or not Options will be granted under the Share Option Scheme and, if so, the number of Options that may be granted. It is also difficult to ascertain with accuracy the subscription price of the Hang Ten Shares given the volatility to which the price of such shares may be subject during the 10-year life span of the Share Option Scheme. In the premises, the Directors are of the view that the value of the Options depends on a number of variables which are either difficult to ascertain or can only be ascertained subject to a number of theoretical bases and speculative assumptions. Accordingly, the Directors believe that any calculation of the value of the Options will not be meaningful and may be misleading to shareholders of Hang Ten in the circumstances.

(b) Eligibility

The Directors may, at their absolute discretion, invite any person belonging to any of the following classes of participants, to take up Options under the Share Option Scheme:

(aa) any Eligible Employee;

(bb) any non-executive director (including independent non-executive directors) of Hang Ten, any of its subsidiaries or any Invested Entity;

(cc) any supplier of goods or services to any member of the Hang Ten Group or any Invested Entity;

(dd) any customer of the Hang Ten Group or any Invested Entity;

(ee) any consultant that provides research, development or other technological support to the Hang Ten Group or any Invested Entity;

(ff) any shareholder of any member of the Hang Ten Group or any Invested Entity or any holder of any securities issued by any member of the Hang Ten Group or any Invested Entity; and

(gg) any ex-employee who has contributed to the development and growth of the Hang Ten Group and any Invested Entity.

and, for the purposes of the Share Option Scheme, the Options may be granted to any company wholly owned by one or more persons belonging to any of the above classes of participants or any discretionary object of a participant which is a discretionary trust. For the avoidance of doubt, the grant of any options by Hang Ten for the subscription of Hang Ten Shares or other securities of the Hang Ten Group to any person who falls within any of the above classes of participants shall not, by itself, unless the Directors have otherwise determined, be construed as a grant of an Option under the Share Option Scheme.

Ð 340 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

The basis of eligibility of any of the above class of participants to the grant of any Options shall be determined by the Directors from time to time on the basis of their contribution to the development and growth of the Hang Ten Group and any Invested Entity.

(aa) The maximum number of Hang Ten Shares to be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option scheme of Hang Ten must not in aggregate exceed 30 per cent. of the issued ordinary share capital of Hang Ten from time to time following the Introduction.

(bb) The total number of Hang Ten Shares which may be issued upon exercise of all options (excluding, for this purpose, options which have lapsed in accordance with the terms of the Share Option Scheme and any other share option scheme of Hang Ten) to be granted under the Share Option Scheme and any other share option scheme of the Hang Ten Group must not in aggregate exceed 10 per cent. of the Hang Ten Shares in issue immediately following Closing (the “General Scheme Limit”). On the basis that 27,100 million Hang Ten Shares will be in issue immediately upon listing, a maximum of 2,710 million Options may be granted by Hang Ten.

(cc) Subject to (aa) above and without prejudice to (dd) below, Hang Ten may seek approval of its shareholders in general meeting to refresh the General Scheme Limit provided that the total number of Hang Ten Shares which may be issued upon exercise of all options to be granted under the Share Option Scheme and any other share option scheme of Hang Ten must not exceed 10 per cent. of the Hang Ten Shares in issue as at the date of approval of the limit and for the purpose of calculating the limit, options previously granted under the Share Option Scheme or any other share option scheme of Hang Ten (including those outstanding, cancelled, lapsed or exercised in accordance with the Share Option Scheme and any other share option scheme of Hang Ten) will not be counted.

(dd) Subject to (aa) above and without prejudice to (cc) above, Hang Ten may issue a circular to its shareholders and seek separate shareholders’ approval in general meeting to grant Options beyond the General Scheme Limit or, if applicable, the limit referred to in (cc) above to participants specifically identified by Hang Ten before such approval is sought.

(d) Maximum entitlement of each participant

The total number of Hang Ten Shares issued and which may fall to be issued upon exercise of the options granted under the Share Option Scheme and any other share option scheme of Hang Ten (including both exercised or outstanding options) to each participant under the Share Option Scheme in any 12 month period shall not exceed 1 per cent. of the issued ordinary share capital of Hang Ten for the time being (the “Individual Limit”). Any further grant of options in excess of the Individual Limit in any 12 month period up to and including the date of such further grant, shall be subject to the issue of a circular to the shareholders of Hang Ten and the shareholders’ approval in general meeting of Hang Ten with such participant and his associates abstaining from voting.

Ð 341 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(e) Grant of options to connected persons

(aa) Any grant of Options to a director, chief executive (other than a proposed director or a proposed chief executive of Hang Ten) or substantial shareholder of Hang Ten or any of their respective associates must be approved by independent non-executive Directors (excluding any independent non-executive Director who is the grantee of the Options).

(bb) In the event of any change in the terms of Options granted to a substantial shareholder or an independent non-executive director of Hang Ten or any of their respective associates; or where any grant of Options to a substantial shareholder or an independent non-executive Director, or any of their respective associates, would result in the Hang Ten Shares issued and to be issued upon exercise of all Options already granted and to be granted (including Options exercised, cancelled and outstanding) to such person in the 12 month period up to and including the date of such grant:

(i) representing in aggregate over 0.1 per cent. of the Hang Ten Shares in issue; and

(ii) having an aggregate value, based on the closing price of the Hang Ten Shares at the date of each grant, in excess of HK$5,000,000,

such further grant of Options must be approved by the shareholders of Hang Ten. Hang Ten must send a circular to its shareholders. All connected persons of Hang Ten must abstain from voting at such general meeting, except that any connected person may vote against the relevant resolution at the general meeting provided that his intention to do so has been stated in the circular. Any vote taken at the meeting to approve the grant of such Options must be taken on a poll.

(f) Time of acceptance and exercise of an Option

An offer of grant of an Option may be accepted by a participant under the Share Option Scheme within 28 days from the date of the offer of grant of the Option. A consideration of HK$1 is payable on acceptance of the offer of grant of an Option.

An Option may be exercised in accordance with the terms of the Share Option Scheme at any time during a period to be determined and notified by the Directors to each grantee, which period may commence on the date on which the offer for the grant of Options is made but shall end in any event not later than 10 years from the date of grant of the Options subject to the provisions for early termination thereof.

(g) Performance targets

Unless the Directors otherwise determine and state in the offer of the grant of Options to a participant under the Share Option Scheme, a participant is not required to achieve any performance targets before any Options can be exercised.

Ð 342 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(h) Subscription price for Hang Ten Shares

The subscription price per Hang Ten Share under the Share Option Scheme shall be a price determined by the Directors, but shall not be lower than the higher of (i) the closing price of Hang Ten Shares as stated in the Stock Exchange’s daily quotation sheet on the date of the offer of grant, which must be a trading day; (ii) the average closing price of Hang Ten Shares as stated in the Stock Exchange’s daily quotation sheet for the five trading days immediately preceding the date of the offer of grant; and (iii) the nominal value of a Hang Ten Share. Without prejudice to the generality of the foregoing, the Directors may grant Options in respect of which the subscription price is fixed at different prices for each different period during the option period provided that the subscription price per Hang Ten Share for each of the different periods shall not be less than the subscription price determined in the aforesaid manner.

(i) Ranking of Hang Ten Shares

(aa) Hang Ten Shares allotted upon the exercise of an Option will be subject to all the provisions of the bye-laws of Hang Ten and will rank pari passu in all respects with the fully paid Hang Ten Shares in issue as from the day when the name of the grantee is registered on the register of members of Hang Ten and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the date when the name of the grantee is registered on the register of members of Hang Ten other than any dividend or other distribution previously declared or recommended or resolved to be paid or made with respect to a record date which shall be before the date when the name of the grantee is registered on the register of members of Hang Ten, provided always that when the date of exercise of the Option falls on a day upon which the register of members of Hang Ten is closed, then the exercise of the Options shall become effective on the first business day in Hong Kong on which the register of members of Hang Ten is re-opened. A Hang Ten Share allotted upon the exercise of an Option shall not carry voting rights until the completion of the registration of the grantee as the holder thereof.

(bb) Unless the context otherwise requires, references to “Hang Ten Shares” in this paragraph include references to shares in the ordinary equity share capital of Hang Ten of such nominal amount as shall result from a sub-division, consolidation, re-classification or reduction of the share capital of Hang Ten from time to time.

(j) Restrictions on the time of grant of Options

No offer for grant of Options shall be made after a price-sensitive event has occurred or a price-sensitive matter has been the subject of a decision until such price-sensitive information has been published in the newspapers. In particular, during the period commencing one month immediately preceding the earlier of (i) the date of the meeting of the Directors for the approval of Hang Ten’s interim or annual results, and (ii) the last date on which Hang Ten must publish its interim or annual results announcement under its listing agreement with the Stock Exchange and ending on the date of the announcement of the results, no Option may be granted.

Ð 343 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

The Directors may not grant any Option to a participant under the Share Option Scheme who is a Director during the periods or times in which Directors are prohibited from dealing in shares pursuant to the Model Code for Securities Transactions by Directors of Listed Companies prescribed by the Listing Rules or any corresponding code or securities dealing restrictions adopted by Hang Ten.

(k) Period of the Share Option Scheme

The Share Option Scheme will remain in force for a period of 10 years commencing on the date on which the Share Option Scheme becomes unconditional.

(l) Rights on ceasing employment

If the grantee of an Option is an Eligible Employee and ceases to be an Eligible Employee for any reason, other than death or for serious misconduct or other grounds referred to in sub-paragraph (n) below, before exercising his or her Option in full, the grantee may exercise the Option up to his or her entitlement at the date of cessation within the period of 1 month following the date of cessation in whole or in part (to the extent not already exercised) which date of cessation will be taken to be the last actual working day of the Eligible Employee with the Hang Ten Group or the Invested Entity whether salary is paid in lieu of notice or not.

(m) Rights on death

If the grantee of an Option is an Eligible Employee and ceases to be an Eligible Employee by reason of his or her death before exercising the Option in full, his or her personal representative(s) may exercise the Option (to the extent not already exercised) in full within a period of 12 months, following the date of death or such longer period as the board of Directors may determine.

(n) Rights on dismissal

If the grantee of an Option is an Eligible Employee and ceases to be an Eligible Employee by reason that he or she has been guilty of misconduct or has committed an act of bankruptcy or has become insolvent or has made any arrangements or composition with his or her creditors generally, or has been convicted of any criminal offence involving his or her integrity or honesty or (if so determined by the board of Directors) on any ground on which an employer would be entitled to terminate his or her employment at common law or pursuant to any applicable laws or under the Eligible Employee’s service contract with Hang Ten or the relevant subsidiary of Hang Ten or the relevant Invested Entity, his or her Option will lapse automatically on the date the Eligible Employee ceases to be an Eligible Employee.

(o) Rights on breach of contract

If the Directors at their absolute discretion determine that the grantee of any Option (other than an Eligible Employee) or his or her associate has committed any breach of any contract entered into between the grantee or his or her associate on the one part and the Hang Ten Group or

Ð 344 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

any Invested Entity on the other part or that the grantee has committed any act of bankruptcy or has become insolvent or is subject to any winding-up, liquidation or analogous proceedings or has made any arrangement or composition with his or her creditors generally, the Directors shall determine that the outstanding Option granted to the grantee shall lapse. In such event, his or her option will lapse automatically and will not in any event be exercisable on or after the date on which the Directors have so determined.

(p) Rights on a general offer

In the event of a general offer, whether by way of take-over offer, share re-purchase offer or scheme of arrangement or otherwise in like manner, is made to all the holders of Hang Ten Shares, or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in association or concert with the offeror, Hang Ten shall use its best endeavours to procure that such offer is extended to all the grantees on the same terms, mutatis mutandis, and assuming that they will become, by the exercise in full of the Options granted to them, shareholders of Hang Ten. If such offer, having been approved in accordance with applicable laws and regulatory requirements becomes, or is declared unconditional, the grantee (or his or her legal personal representative(s)) shall be entitled to exercise the Option in full at any time within 14 days after the date on which such general offer becomes or is declared unconditional. Subject to the above, an Option will lapse automatically on the date on which such offer (or, as the case may be, revised offer) closes.

(q) Rights on winding up

In the event that a notice is given by Hang Ten to its shareholders to convene a shareholders’ meeting for the purposes of considering and, if thought fit, approving a resolution to voluntarily wind up Hang Ten, Hang Ten shall forthwith give notice thereof to each grantee and thereupon, every grantee shall be entitled to exercise his Option (if not already exercised) to its full extent or to the extent specified (such exercise to occur not later than two business days prior to the proposed shareholders’ meeting referred to above) by notice in writing to Hang Ten, stating that the Option is thereby exercised and the number of shares in respect of which it is exercised, accompanied by a remittance for the full amount of the subscription price for the shares in respect of which the notice is given, and Hang Ten shall, as soon as possible and, in any event, no later than the day immediately prior to the date of the proposed shareholders’ meeting, allot such number of shares to the grantee which fall to be issued pursuant to the exercise of the Option. Hang Ten shall give notice to the grantee of the passing of such resolution within seven days after the passing thereof. Subject to the above, an Option will lapse automatically on the date of the commencement of the winding-up of Hang Ten.

(r) Rights on compromise or arrangement between Hang Ten and its creditors

If a compromise or arrangement between Hang Ten and its members or creditors is proposed for the purposes of or in connection with a scheme for the reconstruction of Hang Ten or its amalgamation with any other company or companies, Hang Ten shall give notice thereof to all grantees on the same date as it despatches to each member or creditor of Hang Ten a notice summoning the meeting to consider such a compromise or arrangement, and thereupon each grantee

Ð 345 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(or where permitted under sub-paragraph (m), his or her legal personal representative(s)) shall be entitled to exercise all or any of his or her Options in whole or in part at any time prior to 12 noon on the day immediately preceding the date of the meeting directed to be convened by the court for the purposes of considering such compromise or arrangement. With effect from the date of such meeting, the rights of all grantees to exercise their respective Options shall forthwith be suspended. Upon such compromise or arrangement becoming effective, all Options shall, to the extent that they have not been exercised, lapse and terminate. If for any reason such compromise or arrangement is not approved by the court (whether upon the terms presented to the court or upon any other terms as may be approved by such court) the rights of grantees to exercise their respective Options shall with effect from the date of the making of the order by the court be restored in full and shall thereupon become exercisable (but subject to the other terms of the Share Option Scheme) as if such compromise or arrangement had not been proposed by Hang Ten and no claim shall lie against Hang Ten or any of its officers for any loss or damage sustained by any grantee as a result of the aforesaid suspension. Subject to the above, an Option will lapse automatically on the date the proposed compromise or arrangement becomes effective.

(s) Adjustments to the subscription price

In the event of any alteration in the capital structure (including a capitalisation issue, rights issue, consolidation or sub-division of Hang Ten Shares or reduction of the share capital of Hang Ten) of Hang Ten whilst an Option remains exercisable, such corresponding alterations (if any) certified by the auditors for the time being of or an independent financial adviser to Hang Ten as fair and reasonable will be made to the number of Hang Ten Shares subject to the Option so far as unexercised and/or the subscription price for Hang Ten Shares and/or the method of exercise of the Option concerned and/or the maximum number of shares referred to in paragraphs (c) and (d) above, provided that (i) any alteration shall give a grantee the same proportion of the issued share capital to which he was entitled prior to such alteration and that the aggregate subscription price payable by a grantee on the full exercise of any Option shall remain as nearly as possible the same (but shall not be greater than) as it was before such event; (ii) no alteration shall be made the effect of which would be to enable a Hang Ten Share to be issued at less than its nominal value; and (iii) no such adjustment will be required in circumstances whether there is an issue of Hang Ten Shares or other securities of the Hang Ten Group as consideration in a transaction. In addition, in respect of any such alteration, other than any made on a capitalisation issue, such auditors or independent financial adviser must confirm to the Directors in writing that the alteration satisfy the requirements of the relevant provision of the Listing Rules.

(t) Cancellation of Options

Any cancellation of Options granted but not exercised must be approved by the board of Directors and the shareholders of Hang Ten in general meeting, with participants under the Share Option Scheme and their associates abstaining from voting.

Where Hang Ten cancels Options and issues new ones to the same Option holder, the issue of such new Options may only be made under a scheme with available unissued Options (excluding the cancelled Options) within the limit approved by shareholders of Hang Ten as mentioned in the section headed “Maximum number of Hang Ten Shares” above.

Ð 346 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(u) Termination of the Share Option Scheme

Hang Ten may by resolution in general meeting at any time terminate the Share Option Scheme and in such event no further Options shall be offered but in all other respects the provisions of the Share Option Scheme shall remain in force to the extent necessary to give effect to the exercise of any Options (to the extent not already exercised) granted prior to the termination or otherwise as may be required in accordance with the provisions of the Share Option Scheme. Options (to the extent not already exercised) granted prior to such termination shall continue to be valid and exercisable in accordance with the Share Option Scheme.

(v) Rights are personal to the grantee

An Option is personal to the grantee and shall not be assignable and no grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest in favour of any third party over or in relation to any Option. Any breach of the foregoing shall entitle Hang Ten to cancel any outstanding Option or part thereof granted to such grantee.

(w) Lapse of option

An Option shall lapse automatically (to the extent not already exercised) on the earliest of:

(aa) the expiry of the period referred to paragraph (l) and (m);

(bb) the expiry of the periods or dates referred to in paragraphs (k), (n), (o), (p) (q) and (r); and

(cc) the date on which a breach of the provision on restriction on transfer and assignment of an Option referred to in paragraph (v) is committed.

(x) Alterations to Share Option Scheme

(aa) The terms and conditions of the Share Option Scheme relating to the matters set out in Rule 17.03 of the Listing Rules shall not be altered except with the approval of the shareholders of Hang Ten in a general meeting.

(bb) Any alterations to the terms and conditions of the Share Option Scheme which are of a material nature or any change to the terms of Options granted must be approved by the shareholders of Hang Ten in a general meeting, except where the alterations take effect automatically under the existing terms of the Share Option Scheme.

(cc) The amended terms of the Share Option Scheme or the Options must still comply with the relevant requirements of Chapter 17 of the Listing Rules.

(dd) Any change to the authority of the board of Directors in relation to any alteration to the terms of the Share Option Scheme shall be approved by the shareholders of Hang Ten in general meeting.

Ð 347 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(y) Conditions of Share Option Scheme

The Share Option Scheme is conditional upon, among others, the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Hang Ten Shares that fall to be issued pursuant to the exercise of Options.

(z) Present status of the Share Option Scheme

As at the date of this document, no Option has been granted or agreed to be granted.

Application has been made to the Listing Committee of the Stock Exchange for the granting of the listing of, and permission to deal in, the Hang Ten Shares that fall to be issued pursuant to the exercise of Options.

OTHER INFORMATION

15. Estate duty and tax indemnity

Each of the Investors will, pursuant to a deed of indemnity to be executed by them upon completion of the Sale and Purchase Agreement, jointly and severally give indemnities in favour of Hang Ten (for itself and its Subsidiaries and associated companies) in connection with, among others, any liability for Hong Kong estate duty which might be payable by any member of the Hang Ten Group by reason of transfer of property (within the meaning of section 35 of the Estate Duty Ordinance, Chapter 111 of the Laws of Hong Kong) to any member of the Hang Ten Group on or before the date on which the Proposal becomes unconditional, and any taxation which might be payable by any member of the Hang Ten Group in respect of any income, profits or gains earned, accrued or received or deemed to have been earned, accrued or received on or before the date on which the Proposal becomes unconditional. The Directors have been advised that no material liability for estate duty under the laws of Bermuda is likely to fall on the Hang Ten Group.

None of the Investors, however, will be liable under the deed of indemnity for taxation:

(i) to the extent that provision or reserve has been made for such taxation in the combined audited accounts of the Hang Ten (BVI) Group up to 31 March 2002;

(ii) if such liability for taxation has arisen since 31 March 2002, unless the liability for such taxation would not have arisen but for some act or omission of, or transaction entered into by Hang Ten or any member of the Hang Ten (BVI) Group (whether alone or in conjunction with some other act, omission or transaction, whenever occurring) other than in the course of normal day to day operations of Hang Ten or any member of the Hang Ten (BVI) Group on or before the date on which the Proposal becomes unconditional; and

(iii) to the extent that such liability for taxation arises or is incurred as a result of the imposition of taxation as a consequence of any retrospective change in the law or practice coming into force after the date on which the Proposal becomes unconditional or to the extent that such liability for taxation arises or is increased by an increase in rates of taxation after the date on which the Proposal becomes unconditional with retrospective effect. Ð 348 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

16. Litigation

As at the Latest Practicable Date, none of Hang Ten nor any member of the Hang Ten (BVI) Group is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against Hang Ten or any member of the Hang Ten (BVI) Group.

17. Sponsors

Kim Eng and Asian Capital have made an application on behalf of Hang Ten to the Listing Committee of the Stock Exchange for a listing of, and permission to deal in, the Hang Ten Shares in issue and to be issued as mentioned in this document and any Hang Ten Shares which may fall to be issued pursuant to the conversion of the CPS and the exercise of the Warrants and the Options.

18. Preliminary expenses

The preliminary expenses of Hang Ten are estimated to be approximately US$6,000 and are payable by Hang Ten.

19. Qualification of experts

Name Qualifications

Kim Eng Investment adviser under the Securities Ordinance Asian Capital Investment adviser and dealer under the Securities Ordinance KPMG Certified public accountants Horwath Investment adviser under the Securities Ordinance Chesterton Petty Limited Property valuer Conyers Dill & Pearman Bermuda barristers and attorneys

20. Consents of experts

Each of Kim Eng, Asian Capital, KPMG, Horwath, Chesterton Petty Limited and Conyers Dill & Pearman has given and has not withdrawn its written consent to the issue of this document with the inclusion of its report and/or opinion and/or the references to its name included herein in the form and context in which it is respectively included.

21. Promotor

(a) The promoter of Hang Ten is Mr. Kenneth Hung.

(b) Within the two years preceding the date of this document, no amount or benefit has been paid, or given to the promoter named in sub-paragraph (a) above in connection with the Introduction or the related transactions described in this document.

Ð 349 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

22. Miscellaneous

Save as disclosed on pages 46, 47, 259, 264, 333 to 336 in this document:

(a) within the two years preceding the date of this document, no share or loan capital of Hang Ten or any member of the Hang Ten (BVI) Group has been issued or agreed to be issued fully or partly paid either for cash or for a consideration other than cash;

(b) no share or loan capital of Hang Ten or any member of the Hang Ten (BVI) Group is under option or is agreed conditionally or unconditionally to be put under option;

(d) within the two years preceding the date of this document, no commissions, discounts, brokerages or other special terms have been granted in connection with the issue or sale of any share or loan capital of Hang Ten or any member of the Hang Ten (BVI) Group;

(e) it is not proposed that any payment or other benefit be made or given to any of the Akai Directors or any director of the Subsidiaries of Akai as compensation for loss of office or otherwise in connection with the Proposal;

(f) as at the Latest Practicable Date and save for the Scheme, there was no agreement or arrangement or understanding between any of the Investors or any person acting in concert with any of them and any of the Akai Directors, recent directors, shareholders or recent shareholders of Akai which is conditional upon the outcome of the Proposal or otherwise connected with the Proposal;

(g) as at the Latest Practicable Date, no director of Akai had any personal interest in any material contract entered into by Hang Ten or Hang Ten (BVI);

(h) no director of Akai has a service contract with Akai or any of its subsidiaries or associated companies in force which has more than 12 months to run or any service contract which has been entered into or amended within the Relevant Period;

(i) save that all Akai Shares acquired by Hang Ten under the Scheme will be transferred to the Liquidators (or their nominees) for the sum of HK$1.00 pursuant to the Restructuring Agreement, no agreement, arrangement or understanding exists whereby any securities to be acquired by Hang Ten in pursuance of the securities exchange offer under the Scheme will be transferred to any other persons;

(j) no convertible debt securities have been issued or agreed to be issued by Hang Ten;

(k) there is no arrangement under which future dividends of Hang Ten are waived or agreed to be waived;

Ð 350 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

(l) The major shareholders of Hang Ten are collectively the Kung Family and YGM. Members of the Kung Family comprises Mr. Dennis Kung, Asian Wide, Mr. Kenneth Hung, Ms. Peggy Hung and Ms. Pamela Hung. The respective directors of Asian Wide and YGM are listed in paragraphs (n) and (p) below;

(m) settlement of the consideration to which any Akai Shareholder is entitled under the Scheme will be implemented in full in accordance with the terms of the Scheme without regard to any lien, right of set-off, counterclaim or other analogous right to which Hang Ten may otherwise be, or claim to be, entitled against such Akai Shareholder;

(n) The directors of Hang Ten (BVI) are Mr. Dennis Kung, Kenneth Hung and Chan Wing Sun. As at the Latest Practicable Date, Hang Ten (BVI) was owned by Mr. Dennis Kung, Asian Wide, Kenneth Hung, Peggy Hung, Pamela Hung, YGM, Wang Li Wen, and Kao Yu Chu. The directors of Asian Wide are Mr. Dennis Kung, Kenneth Hung, Hung Cheng Sui Tsen (“Mrs. Kung”) and Peggy Hung. The shareholders of Asian Wide are Mr. Kenneth Hung, Mrs. Kung, Peggy Hung and Pamela Hung.

(o) The address of Asian Wide is situated at P.O. Box 957, Craigmuir Chambers, Road Town, Tortola, British Virgin Island. The address of Hang Ten (BVI) is situated at International Commercial Building, 8th Floor, No. 23, Sec 1, Chang An E. Rd. Taipei, Taiwan. The address of Ms. Wang Li Wen is situated at 87 Jungyang 3rd Street, Shindian, Taipei, Taiwan and the address of Ms. Kao Yu Chu is situated at Unit 1, 8th Floor, 458 Guangfu South Road, Shinyi, Taipei, Taiwan. The address of Kenneth Hung is situated at Unit E, 12th Floor, Tower 8, Island Resort, 28 Siu Sai Wan Road, Chai Wan, Hong Kong. The address of Mr. Dennis Kung and Mrs. Kung is situated at Unit 1, 9th Floor, 135 Sungping Road, Shinyi, Taipei, Taiwan. The address of Peggy Hung and Pamela Hung is situated at Unit 2, 8th Floor, 133 Sungping Road, Shinyi, Taipei, Taiwan;

(p) The executive directors of YGM are Chan Sui Kau, Peter Chan Wing Fui, Chan Wing Sun, Shirley Chan Suk Ling, Michael Chan Wing Ming, Chan Wing Kee, Chan Wing To and William Fu Sing Yam and the non-executive directors of YGM are Takashi Inoúe, Leung Hok Lim and Wong Lam and YGM is a Hong Kong listed company. The address of YGM and its directors is situated at 22 Tai Yau Street, San Po Kong, Kowloon, Hong Kong; and

(q) As at the Latest Practicable Date, (i) Mr. Chan Wing Sun was personally interested in 2,072,072 shares in YGM (representing about 1.34% of the existing issued share capital of YGM); (ii) an aggregate of 29,932,264 shares of YGM (representing about 19.35% of the existing issued share capital of YGM) were held under various trusts and companies established for the benefit of Mr. Chan Wing Sun and his associates; (iii) 34,595,908 shares of YGM (representing about 22.36% of the existing issued share capital of YGM) were held by Canfield Holdings Limited, which is beneficially owned by Mr. Chan Wing Sun and his associates; and (iv) 2,917,480 shares of YGM (representing about 1.89% of the existing issued share capital of YGM) were held by Hearty Development Limited which is beneficially owned by Mr. Chan Wing Sun and his associates. Mr. Chan Wing Sun, together with his associates, is the controlling shareholder of YGM.

Ð 351 Ð APPENDIX VII STATUTORY AND GENERAL INFORMATION ON HANG TEN GROUP HOLDINGS LIMITED

23. Documents available for inspection

Copies of the following documents will be available for inspection during normal business hours on Business Days (Saturdays and public holidays excepted) at the offices of Preston Gates Ellis at 10th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong from the date of this document up to and including the day before the first day of dealings in the Hang Ten Shares on the Stock Exchange or, if earlier, the day when Akai declares that the Proposal has lapsed:

(a) the Memorandum of Association and Bye-laws of Hang Ten and Akai;

(b) the Accountant’s Report on Hang Ten set out in Appendix II and the related statement of adjustments.

(c) the audited financial statements as have been prepared for each of the companies comprising the Hang Ten Group for each of the three years ended 31 March 2002;

(d) the audited financial statements of Akai for the year ended 31 January 1999;

(e) the letter of advice from Horwath;

(f) the material contracts referred to in this Appendix including the Restructuring Agreement;

(g) the written consents referred to in this Appendix;

(h) the rules of the Share Option Scheme;

(i) the letter, summary of values and valuation certificate prepared by Chesterton Petty Limited in connection with the valuation of the Hang Ten Group’s property interests;

(j) the letter of advice from Conyers Dill & Pearman as referred to in Appendix VI;

(l) the service contracts as referred to under the paragraph headed “Particulars of service contracts” in this Appendix.

Ð 352 Ð SCHEME OF ARRANGEMENT

SCHEME OF ARRANGEMENT

(under section 99 of the Companies Act 1981 of Bermuda)

between

AKAI HOLDINGS LIMITED (In Compulsory Liquidation)

and

its SHAREHOLDERS

Ð 353 Ð SCHEME OF ARRANGEMENT

Part 1 Transfer of the Akai Shares ...... 358

Part 2 Consideration for transfer of the Akai Shares ...... 359

Part 3 Delivery of certificates ...... 360

Part 4 Approval of arrangement ...... 361

Part 5 General ...... 361

(A) In the Scheme of Arrangement the following expressions shall, unless the context otherwise requires, have the meanings respectively set opposite such expressions:

“Agent” the Person appointed by the Liquidators pursuant to section 1.1 of the Scheme

“Akai” Akai Holdings Limited (In Compulsory Liquidation), a company incorporated in Bermuda with limited liability

“Akai Group” Akai and its Subsidiaries

“Akai Shareholders” means the Persons listed in Akai’s register of members as holders of the Akai Shares from time to time

“Akai Share(s)” the issued ordinary shares of HK$0.10 each credited as being fully paid up in the share capital of Akai

“Bermuda Court” the Supreme Court of Bermuda

“Business Day” a day (other than Saturday or Sunday) on which the banks are open for business in Hong Kong and Bermuda

“Closing Date” the Business Day on which the Liquidators issue the Closing Notice

“Closing Notice” the written closing notice to be given by the Liquidators to the Company under the Restructuring Agreement

“Company” Hang Ten Group Holdings Limited, a company incorporated in Bermuda with limited liability whose shares will be listed on the Stock Exchange on the Closing Date

Ð 354 Ð SCHEME OF ARRANGEMENT

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

“Companies Ordinance” the Companies Ordinance of Hong Kong (Cap. 32 of the Laws of Hong Kong)

“Creditors” Persons with a Claim

“Creditors’ Schemes” the proposed schemes of arrangement for Akai pursuant to section 166 of the Companies Ordinance and section 99 of the Companies Act and made between Akai and its Creditors with or subject to any modification thereof, or addition thereto or condition approved of or imposed by the Courts

“Effective Date” the date on which the Scheme and the Creditors’ Schemes become effective by virtue of the delivery of office copies of the orders of the Bermuda Court sanctioning the Scheme and the Creditors’ Scheme to the Registrar of Companies in Bermuda for registration and an office copy of the order of the Hong Kong Court sanctioning the Creditors’ Scheme to the Registrar of Companies in Hong Kong for registration

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

“Escrow Agent” RSM Nelson Wheeler Corporate Advisory Services Limited, certified public accountants

“Final Record Date” the final record date for determining entitlements of the Akai Shareholders under the Scheme, being the Business Day immediately preceding the Effective Date

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

“Hang Ten (BVI)” Hang Ten International Holdings Limited, a company incorporated in the British Vrigin Islands with limited liability

“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

“Hong Kong Court” The High Court of Hong Kong

“Investors” Mr. Dennis Kung, his family members and their respective associates, YGM Trading Limited, Ms. Wang Li Wen and Ms. Kao Yu Chu collectively

“Liquidators” Nicholas Timothy Cornforth Hill, Fan Wai Kuen Joseph and R. Craig Christensen, the joint and several liquidators of Akai Ð 355 Ð SCHEME OF ARRANGEMENT

“Long Stop Date” 31 December 2002 or such later date as may be agreed between the Liquidators, Akai (acting through the Liquidators), Hang Ten (BVI) and the Investors and approved by the Stock Exchange

“Proposal” the proposed reorganisation of the Akai Group pursuant to the Restructuring Agreement, including the Scheme

“Restructuring Agreement” the restructuring agreement dated 16 April 2002 (as amended by the supplemental agreement dated 14 May 2002) between, inter alia, Akai (acting through the Liquidators), the Liquidators, Hang Ten (BVI), the Investors and the Escrow Agent in relation to the implementation of the Proposal

“Scheme” the proposed scheme of arrangement in relation to Akai pursuant to section 99 of the Companies Act and made between Akai and the Akai Shareholders, with or subject to any modification thereof, or addition thereto or condition approved or imposed by the Bermuda Court

“Scheme Fund” all amounts credited from time to time to the Scheme Fund Account

“Scheme Fund Account” an interest bearing trust account to be opened in the name of the Scheme Trustee with a licensed bank in Hong Kong for the purposes of and for the benefit of those Persons entitled under the Scheme into which the Scheme Trustee shall place and deposit the Scheme Fund

“Scheme Meeting” the meeting of the Akai Shareholders convened by direction of the Bermuda Court for the purpose of considering and, if thought fit, approving the Scheme, the notice of which is set out on pages 366 and 367 of this document, or any adjournment thereof

Ð 356 Ð SCHEME OF ARRANGEMENT

“Scheme Trustee” such Person as the Liquidators may nominate to hold on trust the Scheme Fund

“Security Interest(s)” any mortgage, pledge, lien, charge, assignment, hypothecation or other agreement having the effect of conferring security

“SFC” the Securities and Futures Commission of Hong Kong

“Shares” the ordinary share(s) of HK$0.001 each in the capital of the Company

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Subsidiary” (in relation to any Person) any corporation, partnership, joint venture, trust or estate of which more than 50 per cent. of:

(b) the interest in the capital or profits of that partnership or joint venture; or

is at the time directly or indirectly owned or controlled by that Person, by that Person and one or more of its other Subsidiaries or by one or more of that Person’s other Subsidiaries

(B) Akai was wound up by the Hong Kong Court on 23 August 2000 and by the Bermuda Court on 29 September 2000. The Liquidators were appointed as liquidators of Akai on 24 May 2001 by the Hong Kong Court and 16 March 2001 by the Bermuda Court.

(C) The authorised share capital of Akai as at 31 January 1999, being the date to which the last audited accounts of Akai were made up, was HK$3,000,000,000 divided into 30,000,000,000 ordinary shares of HK$0.10 of which 1,932,302,000 have been issued and fully paid or credited as fully paid.

(D) The Company was incorporated under the laws of Bermuda on 17 July 2002 with an authorised share capital of HK$100,000 divided into 10,000,000 shares of HK$0.01.

Ð 357 Ð SCHEME OF ARRANGEMENT

(E) As at the date hereof neither the Company nor any of the holders of Shares holds or beneficially owns any Akai Shares.

(F) The primary purpose of this Scheme is for Akai Shareholders to become holders of Shares in the Company and for Akai Shareholders to approve the arrangement set out in Part 4.

(G) The Company has agreed to appear by Counsel at the hearing of the petition to sanction the Scheme and to undertake to the Bermuda Court to be bound thereby and to execute such documents and to do all such acts and things as may be necessary or desirable to be executed or done by it for the purpose of giving effect to the Scheme.

SCHEME OF ARRANGEMENT

Part 1

Transfer of Akai Shares

1. On the Effective Date, all the Akai Shares shall be transferred to the Company, free from all Security Interests and other adverse rights and interests together with all rights attaching to the Akai Shares on the following basis:

1.1 In order to effect the transfer of the Akai Shares to the Company, the Liquidators shall appoint the Agent to execute on behalf of the Akai Shareholders on the Final Record Date instruments of transfer in respect of such Akai Shareholder’s Akai Shares and related contract notes in the form required pursuant to the bye-laws of Akai and any other documents necessary for effecting the transfer at law. All instruments of transfer and other documents executed by the Agent will be legally valid and binding as if they had been executed by the relevant Akai Shareholder. All instruments of transfer will be accepted by Akai for registration in the name of the Company and/or its nominee notwithstanding the absence of any share certificate, declarations of loss or indemnities as required by the bye-laws of Akai to be lodged for the purpose of effecting transfers.

1.2 From the Effective Date and pending the entry of the name of the Company in the register of members of Akai, all Akai Shareholders will hold their Akai Shares on trust for the Company. Akai Shareholders will not be entitled to exercise any rights attaching to the Akai Shares after the Effective Date without the written consent of the Company.

1.3 The Company will be entitled to direct Akai Shareholders in the exercise of any votes and other rights attaching to the Akai Shares and will be deemed to be authorised by each Akai Shareholder to:

1.3.1 execute any consent to the calling of any special general meeting of Akai Shareholders on short notice; or

1.3.2 execute a form or forms of proxy in respect of the Akai Shares by appointing any Person as the Company may nominate for the purpose of attending any special general meeting of Akai Shareholders; or Ð 358 Ð SCHEME OF ARRANGEMENT

1.3.3 exercise the votes attaching to the Akai Shares on behalf of the Akai Shareholder; or

1.3.4 sign on behalf of the Akai Shareholder all written resolutions of the Akai Shareholders.

1.4 Notwithstanding the absence of a share certificate or other document of title or declarations of loss or indemnities in respect of the Akai Shares, the Liquidators will provide whatever sanction, consent or approval as may be required from them under the Companies Ordinance or the bye-laws of Akai in order to give effect to the transfers and registration of the Akai Shares and shall, in their capacity as liquidators of Akai, be entitled to execute all such instruments or other documents and to do all such other acts and things as they may consider necessary or desirable in order to give effect to this Scheme.

1.5 The Company will pay all stamp duties, if any, and other fees or expenses incurred in respect of the execution or otherwise of the instruments of transfer and contract notes and the registration of the transfers by Akai or otherwise as may arise in connection with the transfer of Akai Shares for Akai Shareholders.

Part 2

Consideration for transfer of Akai Shares

2. In exchange for the Akai Shareholders whose names appear on the register as at the Final Record Date transferring their Akai Shares to the Company (subject to arrangements in Clauses 3 and 4 of the Scheme) the Company will allot and issue an aggregate of 300,000,000 Shares to the Akai Shareholders on the Final Record Date to be distributed among them pro rata in accordance with their respective holdings of Akai Shares (subject to rounding down) as at the Final Record Date. The Shares issued and allotted to Akai Shareholders pursuant to this Clause will be credited as fully paid and rank pari passu in all respects with other Shares in issue on the Effective Date.

3. No Akai Shareholder will be entitled to have allotted and issued to him a fraction of a Share. The fractional entitlements (if any) of Akai Shareholders will be aggregated (and, if necessary rounded up to the nearest whole number of Shares) and allotted and issued to a Person nominated by the Liquidators who will sell the Shares and the net proceeds of sale shall be paid to the Liquidators (for the benefit of Akai).

4. If the registered address of an Akai Shareholder is in a place outside Hong Kong, and, in the opinion of the Company’s directors and the Liquidators, the allotment and issue of Shares to that Akai Shareholder may be prohibited by any relevant law or so prohibited except after compliance with conditions or requirements which the directors of the Company and the Liquidators regard as unduly onerous, impracticable or uneconomic, subject to the Executive’s approval, the Company may allot and issue such Shares to the Liquidators or a Person selected by the Liquidators who shall sell the same for such price on market after the commencement of the trading of the Shares on the Stock Exchange as they may obtain and pay the net cash proceeds to that Akai Shareholder in full satisfaction of his rights under the Scheme immediately after the trade settlement date, except that no payment will be made of an amount of less than HK$50. Any such amount will be retained by the Liquidators for the benefit of the liquidation.

Ð 359 Ð SCHEME OF ARRANGEMENT

Part 3

Delivery of certificates

5. Not later than one Business Day after the Effective Date, the Company will deliver or procure to be delivered to the Person entitled to receive Shares under the Scheme share certificates for the appropriate number of Shares that Person is entitled to under the Scheme by sending the share certificates through the post in prepaid envelopes addressed to that Person:

5.1 (subject to Clause 5.3 below) in the case of a sole Akai Shareholder to the registered address then appearing on the register of members of Akai as at the Final Record Date; or

5.2 (subject to Clause 5.3 below) in the case of a joint Akai Shareholder to the registered address appearing on the register of members of Akai as at the Final Record Date of the joint Akai Shareholder whose name then stands first on the register in respect of the joint holding; or

5.3 in the case of Shares allotted and issued pursuant to Clauses 3 and 4 of this Scheme to the relevant Person nominated for that purpose by the Liquidators.

6. Nothing in Clause 5 shall preclude the Company from delivering or procuring to be delivered the share certificates by a method other than posting subject to the prior agreement of the relevant Person(s) entitled to receive Shares under the Scheme.

7. If Shares are allotted or issued to an Akai Shareholder who has no registered address on the register of members of Akai or to whom the document containing this Scheme has been returned undelivered, then and in every such case the relevant share certificates for the Shares shall be retained at the principal office of the Company in Hong Kong or the offices of the Hong Kong branch registrar of the Company pending their collection, but so that nothing in this Clause will limit or restrict the application of any provisions of the bye-laws of the Company from time to time regarding untraceable members.

8. All certificates and cheques are posted at the risk of the Persons entitled to receive Shares under the Scheme and none of the Company, Akai and the Liquidators and their respective directors, officers, employees or agents shall be liable for any loss or delay in transmission.

Part 4

Approval of Arrangement

9. The arrangement pursuant to which, in consideration of the assistance provided by Akai and the Liquidators in facilitating a listing of the Shares by way of introduction under the Listing Rules:

(a) the Company will pay HK$12,000,000 to Akai;

(b) the Company will issue and allot to Akai 2,100,000,000 Shares;

Ð 360 Ð SCHEME OF ARRANGEMENT

(c) the Akai Shares will be acquired by the Company and the Akai Shareholders will receive in aggregate 300,000,000 Shares on the terms and conditions herein;

(d) as soon as practicable after the Closing Date, the Company will transfer all the Akai Shares to the Liquidators for the sum of HK$1.00 to be held by the Liquidators for the benefit of the Akai Shareholders; and

(e) Akai will remain in liquidation and its assets and liabilities will be dealt with in the winding- up proceedings of Akai,

is hereby approved.

10. In the event that Akai’s winding-up becomes a solvent winding-up any surplus from the realisation of Akai’s assets, after paying the costs and expenses of the winding-up and discharging in full the Claims of Creditors, will constitute the Scheme Fund.

Within 90 Business Days of the Scheme Trustee being notified by the Liquidators of the dissolution of Akai the Scheme Trustee will pay any amounts standing to the credit of the Scheme Fund, after deducting the Scheme Costs, to the Akai Shareholders in accordance with their respective rights or otherwise as directed by Akai’s memorandum of association and bye-laws.

Part 5

General

11. All mandates and other instructions to Akai in force at the opening of business on the Effective Date relating to an Akai Share will with effect from the Effective Date, unless and until revoked or directed otherwise by an Akai Shareholder to the Company, be deemed to be valid and subsisting mandates and instructions to the Company in relation to the Shares to be allotted and issued pursuant to Clause 2 of this Scheme.

12. On the Effective Date, all existing certificates representing holdings of Akai Shares at the close of business on the Final Record Date will cease to have effect for any purposes and every Akai Shareholder shall be bound on the request of the Liquidators or the Company to deliver up the certificate(s) to the Liquidators or, following the dissolution of Akai, the Company.

13. This Scheme shall become effective as soon as an office copy of the Order of the Bermuda Court sanctioning this Scheme under Section 99 of the Companies Act is delivered to the Registrar of Companies in Bermuda for registration.

14. Unless this Scheme shall have become effective on or before the Long Stop Date or such later date, if any, as the Bermuda Court may allow, this Scheme shall lapse.

15. Akai, acting through the Liquidators, and the Company may jointly consent for and on behalf of all concerned to any modification of or addition to this Scheme or to any condition which the Bermuda Court may see fit to approve or impose.

Ð 361 Ð SCHEME OF ARRANGEMENT

16. All costs, charges, expenses and disbursements incurred prior to the Effective Date in connection with the negotiation and preparation of the Scheme, including the costs of holding the Scheme Meeting and the costs of obtaining the necessary orders from the Bermuda Court and the Hong Kong Court, to the extent not so provided for by the Company, shall be borne as provided for in the Restructuring Agreement.

17. The Scheme will terminate on the earlier of the date of the dissolution of Akai or the date on which payments from the Scheme Fund to Akai Shareholders have been completed.

18. The Scheme shall be subject to the laws of Bermuda and the Akai Shareholders shall submit to the non-exclusive jurisdiction of the Bermuda Court in respect thereof.

Dated as of the Effective Date

Ð 362 Ð ORDER ON ORIGINATING SUMMONS

IN THE SUPREME COURT OF BERMUDA

CIVIL JURISDICTION

2002 : No. 410

IN THE MATTER OF

AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION)

and

IN THE MATTER OF SECTION 99 OF THE COMPANIES ACT 1981

ORDER ON ORIGINATING SUMMONS

Filed on: 24 October 2002

Ð 363 Ð ORDER ON ORIGINATING SUMMONS

IN THE SUPREME COURT OF BERMUDA

CIVIL JURISDICTION

2002 : No. 410

IN THE MATTER OF

AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION)

and

IN THE MATTER OF SECTION 99 OF THE COMPANIES ACT 1981

ORDER ON ORIGINATING SUMMONS

UPON THE APPLICATION by Originating Summons dated 24 October 2002 of the joint and several Liquidators (the “Liquidators”) of Akai Holdings Limited (In Compulsory Liquidation) (the “Company”), acting without personal liability at 7th Floor Allied Kajima Building, 138 Gloucester Road, Wanchai, Hong Kong Special Administrative Region of the People’s Republic of China (“Hong Kong”);

AND UPON HEARING Counsel for the Liquidators on behalf of the Company;

AND UPON READING the Originating Summons and the Affidavit of Cosimo Borrelli filed herein on 28 October 2002.

IT IS ORDERED:

(1) that the Company DO CONVENE a shareholders’ meeting (the “Shareholders’ Meeting”) to be held in Hong Kong of the shareholders of the Company (the “Shareholders”) for the purpose of considering and, if thought fit, approving, with or without modification, the Scheme of Arrangement proposed to be made between the Company and the Shareholders;

(2) that, at least twenty-one (21) clear days before the day appointed for the Shareholders’ Meeting, a NOTICE shall be published convening the Shareholders’ Meeting and stating that, upon request, copies of a printed composite document containing the Scheme of Arrangement and an Explanatory Statement, as required under Section 100 of the Companies Act 1981 of Bermuda, together with a form of proxy will be furnished to any person entitled to attend the Shareholders’ Meeting during usual business hours on any day (other than a Saturday afternoon, a Sunday or a statutory holiday) at the principal place of business of the Company at 7th Floor, Allied Kajima Building, 138 Gloucester Road, Wanchai, Hong Kong prior to the day appointed for the Shareholders’ Meeting at Plaza I,-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wan Chai, Hong Kong at 10:00 a.m. on 25 November 2002. The

Ð 364 Ð ORDER ON ORIGINATING SUMMONS

NOTICE will be placed in one English newspaper in Hong Kong namely “The Standard” and one Chinese newspaper in Hong Kong namely “Sing Tao Daily” and one English newspaper in Bermuda namely “The Royal Gazette”; and

(3) that, at least twenty-one (21) clear days before the day appointed for the Shareholders’ Meeting, a copy of the printed composite document containing a NOTICE convening the Shareholders’ Meeting, the Scheme of Arrangement and the Explanatory Statement, and enclosing a form of proxy to be served personally on each of the Shareholders or sent by mail posted in Hong Kong to such Shareholders (in the case of joint holders at the address of the joint holders whose name stands first in the register of members of the Company in respect of the joint holding), as follows:

(a) in the case of those Shareholders having a registered or last known address in Hong Kong or the Macau Special Administrative Region of the People’s Republic of China, by hand or by prepaid surface mail posted to such address; and

(b) in the case of those Shareholders having a registered or last known address elsewhere, by prepaid ordinary airmail posted to such address.

AND IT IS FURTHER ORDERED that costs in the application be reserved.

AND THE COURT HEREBY APPOINTS Cosimo Borrelli of RSM Nelson Wheeler Corporate Advisory Services Limited, or failing him, Nicholas Timothy Cornforth Hill, being one of the Liquidators, or failing both of them, Fan Wai Kuen, Joseph, being one of the Liquidators, to act as chairman of the Shareholders’ Meeting.

AND THE COURT HEREBY APPROVES the NOTICES and the form of proxy AND ORDERS that the Chairman do report the result of such Shareholders’ Meeting to the Court.

AND THAT there shall be liberty to apply generally.

DATED 29 October 2002.

Ð 365 Ð NOTICE OF SCHEME MEETING

IN THE SUPREME COURT OF BERMUDA

CIVIL JURISDICTION

2002 : No. 410

IN THE MATTER OF

AKAI HOLDINGS LIMITED (IN COMPULSORY LIQUIDATION)

and

IN THE MATTER OF SECTION 99 OF THE COMPANIES ACT 1981

NOTICE OF SHAREHOLDERS’ MEETING

NOTICE IS HEREBY GIVEN that, by an Order dated 29 October 2002, the Court has directed that a shareholders’ meeting (“Shareholders’ Meeting”) be convened of the shareholders (the “Shareholders”) of Akai Holdings Limited (In Compulsory Liquidation) (the “Company”) for the purpose of considering and, if thought fit, approving (with or without modification) the Scheme of Arrangement proposed to be made between the Company and the Shareholders. The Shareholders’ Meeting will be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wan Chai, Hong Kong on 25 November 2002 at 10:00 a.m. immediately before the Special General Meeting of the Shareholders which will be held at 10:30 a.m. at the same venue at which place and times all Shareholders are requested to attend.

A copy of the Scheme of Arrangement and a copy of the Explanatory Statement required to be furnished pursuant to section 100 of the Companies Act 1981 of Bermuda are incorporated in the composite document of which this Notice forms part.

Shareholders may vote in person at the Shareholders’ Meeting or they may appoint another person, whether a Shareholder or not, as their proxy to attend and vote in their place. A form of proxy for use at the Shareholders’ Meeting is enclosed herewith. The Form of Proxy should be lodged with the Company at its principal place of business at 7th Floor, Allied Kajima Building, 138 Gloucester Road, Wanchai, Hong Kong not less than 48 hours prior to the time appointed for the holding of the Shareholders’ Meeting.

By the same Order, the Court has appointed Cosimo Borrelli of RSM Nelson Wheeler Corporate Advisory Services Limited or, failing him, Nicholas Timothy Cornforth Hill, being one of the Liquidators, or failing both of them, Fan Wai Kuen, Joseph, being one of the Liquidators, to act as Chairman of the Shareholders’ Meeting and has directed the Chairman to report the results thereof to the Court.

Ð 366 Ð NOTICE OF SCHEME MEETING

The Scheme of Arrangement will be subject to the subsequent approval of the Court.

Nicholas Timothy Cornforth Hill Fan Wai Kuen Joseph R. Craig Christensen Joint and Several Liquidators Akai Holdings Limited (In Compulsory Liquidation) acting without personal liability

RSM Nelson Wheeler, Corporate Advisory Services Limited 7th Floor Allied Kajima Building 138 Gloucester Road Wanchai Hong Kong

Ð 367 Ð NOTICE OF SPECIAL GENERAL MEETING

NOTICE OF SPECIAL GENERAL MEETING Akai Holdings Limited (In Compulsory Liquidation) 雅佳控股有限公司 (incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a Special General Meeting (the “Meeting”) of Akai Holdings Limited (In Compulsory Liquidation) (“the Company”) will be held at Plaza I-III, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Hong Kong on 25 November 2002 at 10:30 a.m. (or as soon thereafter as the meeting of the holders of the ordinary shares of HK$0.10 each in the capital of the Company convened by the Supreme Court of Bermuda at the same place and on the same day shall have been concluded or adjourned) for the purpose of considering and, if thought fit, passing the following resolution:

Special Resolution

“THAT the restructuring agreement (the Restructuring Agreement) entered into on 16 April 2002 between, inter alia, the Company, Nicholas Timothy Cornforth Hill, Fan Wai Kuen Joseph and R. Craig Christensen as Liquidators in Hong Kong, Hang Ten International Holdings Limited and RSM Nelson Wheeler Corporate Advisory Services Limited (as amended by a supplemental agreement dated 14 May 2002), a copy of which has been produced to this Meeting marked “A” and for the purpose of identification signed by the Chairman of the Meeting, and the transactions contemplated therein be and are hereby approved, confirmed and ratified and the Liquidators be and are hereby authorized to take such action and execute such further documents or deeds as they may consider necessary or desirable for the purpose of implementing the transactions contemplated in the Restructuring Agreement, including the Shareholders’ Scheme of Arrangement between Akai and its shareholders, a copy of which is contained in a listing document dated 31 October 2002 which has been produced to this meeting, and for the purpose of identification marked “B”, signed by the Chairman of this Meeting and the exercise or enforcement of any of Akai’s rights under the Restructuring Agreement and to make and agree such variations of the terms of the Restructuring Agreement as they may in their discretion consider to be necessary or desirable.”

For and on behalf of Akai Holdings Limited (In Compulsory Liquidation) Nicholas Timothy Cornforth Hill Fan Wai Kuen Joseph R. Craig Christensen Joint and Several Liquidators acting without personal liability

31 October 2002

Principal place of business: 7th Floor, Allied Kajima Building 138 Gloucester Road Wanchai Hong Kong

Notes:

1. A member entitled to attend and vote at the Meeting is entitled to appoint not more than two proxies to attend and vote in his stead. A proxy need not be a member of the Company.

2. A blue form of proxy for use at the Meeting is enclosed. Completion and return of the form of proxy will not preclude a member from attending the Meeting and voting in person if he so wishes. In such event, his form of proxy will be deemed to have been revoked.

Ð 368 Ð