Value Partners Group Limited — Capital/Financing Update 2008

THIS PROSPECTUS IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this Prospectus or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional advisor.

If you have sold or transferred all your shares in the Company, you should at once hand the Prospectus Documents to the purchaser(s) or the transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

A copy of each of the Prospectus Documents has been registered with the Registrar of the Companies in Hong Kong pursuant to Section 342C of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong). A copy of the Prospectus has been or will as soon as reasonably practicable be filed with the Registrar of Companies in Bermuda in accordance with the requirements of the Companies Act 1981 of Bermuda. The Registrar of Companies in Hong Kong and the Registrar of Companies in Bermuda take no responsibility for the contents of any of these documents.

Subject to the granting of the listing of, and permission to deal in, the Offer Shares on the Stock Exchange, the Offer 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 Offer 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. You should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser for details of those settlement arrangements and how such arrangements may affect your rights and interests.

The Stock Exchange and the HKSCC take no responsibility for the contents of this Prospectus, 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 Prospectus.

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(Incorporated in Bermuda with limited liability) (Stock Code: 403)

OPEN OFFER OF NEW SHARES ON THE BASIS OF ONE OFFER SHARE FOR EVERY FIVE EXISTING SHARES

Financial Adviser

Underwriter

Best Grade Advisory Limited

The latest time for acceptance and payment for the Offer Shares is 4: 00 p.m. on Tuesday, 10 June 2008. The procedures for application are set out on pages 18 to 20 of this Prospectus.

The existing Shares have been dealt in on an ex-entitlement basis since Monday, 19 May 2008. Such dealing in Shares will take place whilst the conditions to which the Open Offer is subject remain unfulfilled. A person dealing in Shares on an exentitlement basis will accordingly bear the risk that the Open Offer may not become unconditional and may not proceed. Shareholders contemplating any dealing in the Shares are recommended to consult their own professional adviser if they are in any doubt.

The Underwriting Agreement contains provisions entitling the Underwriter by notice in writing to the Company served prior to 4: 00 p.m. on Thursday, 12 June 2008 or such other time or date as the Company and the Underwriter may agree in writing to terminate the Underwriting Agreement on the occurrence of certain events including force majeure as set out in the section headed ‘‘Termination of the Underwriting Agreement’’ on page 7 of this Prospectus.

If the Underwriter terminate the Underwriting Agreement, or if the conditions of the Underwriting Agreement are not fulfilled (or waived by the Underwriter) in accordance with the terms thereof, the Open Offer will not proceed. Shareholders should therefore exercise caution when dealing in the Shares, and if they are in any doubt about their position, they are recommended to consult their professional adviser.

• for identification purpose only

27 May 2008

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Termination of the Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Appendix I — Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Appendix II — Unaudited Pro Forma Financial Information of the Group . . . . . . . . .	84
Appendix III — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	88

– i –

DEFINITIONS

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

• ‘‘Announcement’’ the announcement dated 2 May 2008 issued by the Company in relation to the Open Offer

• ‘‘Application Form(s)’’ the application form(s) for use by the Qualifying Shareholders to apply for the Offer Shares

• ‘‘associates’’ has the meaning ascribed to it in the Listing Rules ‘‘Back Stop Date’’ 20 June 2008 ‘‘Best Grade’’ Best Grade Advisory Limited, being the controlling Shareholder and the beneficial owner of approximately 52.11% of the issued share capital of the Company

• ‘‘Board’’ the board of Directors ‘‘Business Day’’ a day (other than a Saturday and Sunday or a day on which a tropical cyclone warning signal no. 8 or above or a ‘‘black’’ rainstorm warning signal is hoisted in Hong Kong at any time between 9: 00 a.m. and 4: 00 p.m.) on which banks in Hong Kong are open for business

• ‘‘CCASS’’ Central Clearing and Settlement System established and operated by HKSCC

• ‘‘Companies Companies Ordinance (Chapter 32 of the Laws of Hong Kong) Ordinance’’

• ‘‘Company’’ Starlite Holdings Limited, a company incorporated in Bermuda with limited liability whose issued Shares are listed on the main board of the Stock Exchange

• ‘‘Dayspring’’ Dayspring Enterprises Limited, the entire issued share capital of which is beneficially owned and controlled by Mr. Lam and Ms. Yeung

• ‘‘Directors’’ the directors of the Company

• ‘‘Excess Application the form(s) of application for Excess Offer Shares to be issued to Form(s)’’ Qualifying Shareholders in connection with the Open Offer

• ‘‘Excess Offer Shares’’ the entitlements to Offer Shares that would otherwise have been offered to the Non-Qualifying Shareholders and any Offer Shares offered to, but not accepted by, Qualifying Shareholders

• ‘‘Group’’ the Company, its subsidiaries and jointly controlled entities

– 1 –

DEFINITIONS

‘‘Hong Kong’’

• The Hong Kong Special Administrative Region of the People’s Republic of China

• ‘‘HKSCC’’

Hong Kong Securities Clearing Company Limited

• ‘‘Last Trading Day’’

• 30 April 2008, being the last trading day of the Shares prior to the publication of the Announcement

• ‘‘Latest Acceptance Time’’

• 4: 00 p.m. on Tuesday, 10 June 2008, or such other date as the Company and the Underwriter may agree in writing, being the latest time for acceptance of the Offer Shares as described in the Prospectus

• ‘‘Latest Practicable 23 May 2008, being the latest practicable date prior to the Date’’ printing of this Prospectus for ascertaining certain information referred in this Prospectus

• ‘‘Listing Committee’’ the Listing Committee of the Stock Exchange

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange

• ‘‘Mr. Lam’’

• Mr. Lam Kwong Yu, Chairman of the Company, an executive Director and spouse of Ms. Yeung

• ‘‘Ms. Yeung’’ Ms. Yeung Chui, Vice Chairman of the Company, an executive Director and spouse of Mr. Lam

• ‘‘Non-Qualifying Shareholders whose names appear on the principal register of Shareholder(s)’’ members of the Company in Bermuda or the branch register of members of the Company in Hong Kong as at the close of business on the Record Date and whose addresses as shown on such principal or branch registers of members of the Company are in places outside Hong Kong where, in the opinion of the board of directors of the Company (having obtained relevant and necessary legal opinions), it would or might be unlawful or impracticable to offer Offer Shares in such places on account of any legal or regulatory restrictions or special formalities in such places

• ‘‘Offer Shares’’ not less than 86,059,197 and not more than 87,412,197 new Shares to be issued pursuant to the Open Offer

• ‘‘Open Offer’’

• the offer of the Offer Shares on the basis of one Offer Share for every five existing Shares held by the Qualifying Shareholders at the close of business on the Record Date at the Subscription Price pursuant to the Open Offer Documents

– 2 –

DEFINITIONS

• ‘‘Open Offer the Prospectus, the Application Form(s) and the Excess Documents’’ or Application Form(s) ‘‘Prospectus Documents’’

• ‘‘Overseas with respect to any specified date, the Shareholders with Shareholders’’ registered addresses on the register of members of the Company which are outside Hong Kong on such date

• ‘‘Posting Date’’ Tuesday, 27 May 2008, or such other date as the Company and the Underwriter may agree in writing, being the date of despatch of the Open Offer Documents

• ‘‘Prospectus’’ a document relating to the Open Offer prepared in accordance with the Listing Rules to be despatched to the Qualifying Shareholders and, for information only, to the Non-Qualifying Shareholders in such usual form as may be agreed between the Company and the Underwriter

• ‘‘Qualifying the Shareholder(s), other than the Non-Qualifying Shareholder(s), Shareholder(s)’’ whose name(s) appear(s) on the register of members of the Company at the close of business on the Record Date

• ‘‘Record Date’’ Monday, 26 May 2008, or such other date as the Company and the Underwriter may agree in writing, being the record date to determine entitlements to the Open Offer

• ‘‘SFO’’ Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• ‘‘Share(s)’’ existing ordinary share(s) of HK$0.1 each in the share capital of the Company

• ‘‘Shareholder(s)’’

• the holder(s) of the Shares

• ‘‘Share Option(s)’’ options granted by the Company under the share option scheme adopted by the Company on 6 September 2002, entitling the holders of such options to subscribe for Shares

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

• ‘‘Subscription Price’’ the subscription price of HK$0.35 per Offer Share

• ‘‘Trading Day’’ a day on which the Stock Exchange is open for trading

• ‘‘Underwriter’’ Best Grade, being the underwriter of the Open Offer, whose ordinary business does not include underwriting

– 3 –

DEFINITIONS

• ‘‘Underwriting Agreement’’

• the agreement dated 30 April 2008 between the Company and the Underwriter in relation to the underwriting and other arrangements in respect of the Open Offer

• ‘‘Underwritten Shares’’

• not less than 40,395,963 and not more than 41,208,963 Offer Shares (see Note (1)) that the Underwriter have effectively agreed to subscribe for, which are not subscribed by the Qualifying Shareholders (other than Best Grade, Dayspring, Mr. Lam and Ms. Yeung) pursuant to the Underwriting Agreement

• ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong

• ‘‘%’’ per cent

• Note (1): The Underwriter has agreed to underwrite all of the Offer Shares in accordance with the terms of the Underwriting Agreement. However, as a result of the undertaking of Best Grade, Dayspring, Mr. Lam and Ms. Yeung to take up their pro rata entitlement under the Open Offer, the underwriting obligations under the Underwriting Agreement should effectively limited to the number of Underwritten Shares.

– 4 –

2008

EXPECTED TIMETABLE

The expected timetable for the proposed Open Offer is set out below:

• Last day of dealings in existing Shares

• on a cum-entitlement basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 16 May

• Commencement date of dealings in existing Shares

• on an ex-entitlement basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Monday, 19 May

• Latest time for lodging transfers of Shares in order to qualify for the Open Offer . . . . . . . . . . . 4: 00 p.m. on Tuesday, 20 May

• Register of members of the Company

• to be closed . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 21 May to Monday, 26 May

• Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 26 May

• Register of members of the Company to be re-opened . . . . . . . . . . . . Tuesday, 27 May

• Open Offer Documents despatched on . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 27 May

• Latest time for acceptance of, and payment for Offer Shares and application for

• Excess Offer Shares . . . . . . . . . . . . . . . . . . . . . . . . 4: 00 p.m. on Tuesday, 10 June

Latest time for termination of

• the Underwriting Agreement . . . . . . . . . . . . . . . . . 4: 00 p.m. on Thursday, 12 June

• Announcement of results of Open Offer on or before . . . . . . . . . . . . Monday, 16 June

• Refund cheques in respect of wholly or partially unsuccessful applications for Excess Offer Shares

• to be despatched on or before . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 18 June

• Certificates for Offer Shares expected to be

• despatched on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 18 June

Dealings in Offer Shares on the Stock Exchange to commence on . . . . . Friday, 20 June

All times and dates in this Prospectus refer to Hong Kong times and dates. Dates or deadlines specified above are indicative only and may be varied by agreement between the Company and the Underwriter. Any changes to the expected timetable above will be published or notified to the Shareholders appropriately.

– 5 –

EXPECTED TIMETABLE

Effect of bad weather on the latest time for acceptance of and payment for Offer Shares

The latest time for acceptance of and payment for Offer Shares will not take place on the Latest Acceptance Time if there is:

• a tropical cyclone warning signal number 8 or above, or

• a ‘‘black’’ rainstorm warning

• (i) in force in Hong Kong at any local time before 12: 00 noon and no longer in force after 12: 00 noon on Tuesday, 10 June 2008. Instead the Latest Acceptance Time will be extended to 5: 00 p.m. on the same Business Day;

• (ii) in force in Hong Kong at any local time between 12: 00 noon and 4: 00 p.m. on Tuesday, 10 June 2008. Instead the Latest Acceptance Time will be rescheduled to 4: 00 p.m. on the following Business Day which does not have either of those warnings in force at any time between 9: 00 a.m. and 4: 00 p.m.

If the Latest Acceptance Time does not take place on Tuesday, 10 June 2008, the dates mentioned in the section headed ‘‘Expected Timetable’’ in this Prospectus may be affected. An announcement will be made by the Company in such event.

– 6 –

TERMINATION OF THE UNDERWRITING AGREEMENT

The Underwriting Agreement contains provisions entitling the Underwriter, by notice in writing, to terminate its obligations thereunder on the occurrence of certain events. If at any time on or before 4: 00 p.m. on the second Business Day after the Latest Acceptance Time (i.e. Thursday, 12 June 2008 pursuant to the expected timetable), one or more of the following events or matters (whether or not forming part of a series of events) shall occur, arise, exist, or come into effect:

• (a) the introduction of any new law or regulation or any change in existing law of regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may materially adversely affect the business or the financial or trading position of the Group as a whole; or

• (b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date thereof) of a political, military, financial, economic, currency or other nature (whether or not sui generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities market or the occurrence of any combination of circumstances which materially adversely affects the business or the financial or trading position of the Group as a whole or materially adversely prejudices the success of the Open Offer or the taking up of the Offer Shares by the members of the Company; or

• (c) any material change in market conditions or combination of circumstances in Hong Kong or elsewhere (including without limitation suspension or material restriction or trading in securities) occurs which may adversely and materially affect the success of the Open Offer or the taking up of the Offer Shares by members of the Company.

Upon the giving of termination notice by the Underwriter, all obligations of the Underwriter under the Underwriting Agreement shall cease and determine and neither party shall have any claim against the other in respect of any matter or thing arising out of or in connection with the Underwriting Agreement (save for any antecedent breaches thereof).

– 7 –

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 403)

Executive Directors: Mr. Lam Kwong Yu (Chairman) Ms. Yeung Chui (Vice Chairman) Mr. Tai Tzu Shi, Angus (Senior Vice President) Mr. Cheung Chi Shing, Charles (Senior Vice President) Mr. Lim Pheck Wan, Richard (Senior Vice President)

Independent Non-Executive Directors: Mr. Chan Yue Kwong, Michael Mr. Kwok Lam-Kwong, Larry, JP Mr. Tam King Ching, Kenny

Registered Office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Head Office and Principal Place of Business in Hong Kong: 3/F., Perfect Industrial Building 31 Tai Yau Street Sanpokong Kowloon, Hong Kong

27 May 2008

To the Qualifying Shareholders,

Dear Sir or Madam,

OPEN OFFER OF NEW SHARES ON THE BASIS OF ONE OFFER SHARE FOR EVERY FIVE EXISTING SHARES

INTRODUCTION

As stated in the Announcement, the Company and the Underwriter entered into the Underwriting Agreement on 30 April 2008 with a view of implementing the Open Offer. The Board proposes to raise not less than approximately HK$30.12 million and not more than approximately HK$30.59 million, before expenses, by issuing not less than 86,059,197 Offer Shares and not more than 87,412,197 Offer Shares at the Subscription Price of HK$0.35 per Offer Share by way of the Open Offer on the basis of one Offer Share for every five existing Shares held by the Qualifying Shareholders on the Record Date and payable in full upon acceptance.

• for identification purpose only

– 8 –

LETTER FROM THE BOARD

The purpose of this Prospectus is to provide you with further information regarding the Open Offer, including information on procedures for application and payment and certain financial information and other information in respect of the Group.

OPEN OFFER

Issue statistics

Basis of the Open Offer : One Offer Share for every five existing Shares held by Qualifying Shareholders on the Record Date Number of existing Shares : 430,295,989 Shares in issue as at the Latest Practicable Date

Number of authorised Shares : 1,000,000,000 Shares as at the Latest Practicable Date

Number of Offer Shares : not less than 86,059,197 Offer Shares and not more than 87,412,197 Offer Shares

Underwriter : Best Grade Subscription Price for : HK$0.35 per Offer Share Offer Shares

Under the Open Offer, on the assumption that no outstanding Share Option is exercised before the Record Date, 86,059,197 Offer Shares would be allotted, representing approximately 20% of the existing issued share capital of the Company as at the Latest Practicable Date and approximately 16.67% of the issued share capital of the Company as enlarged by the issue of 86,059,197 Offer Shares. There are 6,765,000 Share Options outstanding and exercisable as at the Latest Practicable Date. On the assumption that the 6,765,000 Share Options will all be exercised before the Record Date and qualified for the Open Offer, not more than 87,412,197 Offer Shares would be allotted under the Open Offer, representing approximately 20.31% of the existing issued share capital of the Company as at the Latest Practicable Date and approximately 16.67% of the issued share capital of the Company as enlarged by the 6,765,000 Shares issued upon the exercise of the 6,765,000 Share Options and the issue of 87,412,197 Offer Shares. Save as disclosed, apart from the 6,765,000 Share Options, there are no other outstanding warrants, convertible notes or other rights to subscribe for Shares as at the Latest Practicable Date.

– 9 –

LETTER FROM THE BOARD

Qualifying Shareholders and Non-Qualifying Shareholders

The Company will send the Open Offer Documents to Qualifying Shareholders only. To qualify for the Open Offer, a Shareholder must be registered as a member of the Company at the close of business on the Record Date and must not be a Non-Qualifying Shareholder. In order to be registered as a member at the close of business on the Record Date, all transfer of Shares (with the relevant share certificates) must be lodged for registration with the branch share registrar of the Company in Hong Kong, by 4: 00 p.m. (Hong Kong time) on Tuesday, 20 May 2008 according to the expected timetable.

The branch share registrar of the Company in Hong Kong is Tricor Secretaries Limited of 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

The Open Offer Documents will not be registered or filed under the applicable securities or equivalent legislation of any jurisdiction other than Hong Kong and Bermuda. The invitation to subscribe for the Offer Shares to be made to the Qualifying Shareholders will not be transferable. The Company will send the Prospectus, but not the Application Forms and Excess Application Forms, to the Non-Qualifying Shareholders for their information only. The entitlements of the Non-Qualifying Shareholders under the Open Offer may be taken up by the Qualifying Shareholders who have applied for the Offer Shares through excess application.

Rights of the overseas or Non-Qualifying Shareholders

Based on the register of members of the Company as at the Latest Practicable Date, there were three Overseas Shareholders, and their addresses as shown in the register of members of the Company were in the United States, Australia and Singapore. The Company has complied with all necessary requirements specified in Rule 13.36(2) of the Listing Rules and has made enquiry with its legal advisers regarding the feasibility of extending the Open Offer to the Overseas Shareholders under the laws of the relevant places and the requirements of the relevant regulatory bodies or stock exchanges.

The Company has obtained advice from its legal adviser in Singapore confirming that no local legal or regulatory compliance is required to be made in this jurisdiction in connection with the Open Offer. Accordingly, the Open Offer will be extended to the Overseas Shareholder in Singapore.

The Company has also obtained advices from its legal advisers in Australia and the United States confirming that local legal and regulatory requirements may have to be complied with if the Open Offer is to be extended to the Overseas Shareholders in these jurisdictions. In this connection, the Company considers that it would be necessary or expedient to exclude the Overseas Shareholders in these jurisdictions from the Open Offer, taking into consideration the said legal advice and due to impracticality and/or the time and costs involved in complying with the relevant local legal or regulatory requirements. The Company has therefore arranged for this Prospectus, and not the Application Forms and Excess Application Forms, to be sent to the Non-Qualifying Shareholders for their information only.

– 10 –

LETTER FROM THE BOARD

Closure of Register of Members

The register of members of the Company was closed from Wednesday, 21 May 2008 to Monday, 26 May 2008 (both dates inclusive) to determine entitlement of Qualifying Shareholders as at the Record Date. No transfer of Shares can be registered during this period.

Subscription Price for the Offer Shares

The Subscription Price of HK$0.35 per Offer Share will be payable in full on application. The Subscription Price represents:

• (i) a discount of approximately 32.69% to the closing price of HK$0.52 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (ii) a discount of approximately 34.70% to the average closing price of HK$0.536 per Share as quoted on the Stock Exchange for the five consecutive Trading Days up to and including the Last Trading Day;

• (iii) a discount of approximately 31.97% to the average closing price of HK$0.5145 per Share as quoted on the Stock Exchange for the ten consecutive Trading Days up to and including the Last Trading Day;

• (iv) a discount of approximately 28.86% to the theoretical ex-right price of approximately HK$0.492 based on the closing price of HK$0.52 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (v) a discount of approximately 62.81% over the unaudited consolidated net assets value per Share of approximately HK$0.941 as at 30 September 2007 (based on the unaudited consolidated net assets value of the Group over the number of issued Shares as at 30 September 2007); and

• (vi) a discount of approximately 23.91% to the closing price of HK$0.46 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

The Subscription Price was arrived at with reference to the market price of the Shares under the prevailing market conditions and the relatively low liquidity of the Shares and was agreed on an arm’s length basis between the Company and the Underwriter. The Directors consider the Subscription Price and the rate of discount to the closing price on the Last Trading Day to be fair and reasonable and in the interests of the Company and the Shareholders as a whole on the basis that the Qualifying Shareholders are offered a chance to elect to subscribe for the Offer Shares at a relatively low price and to maintain their respective pro rata shareholdings in the Company. The Directors also consider that the discount will encourage the Qualifying Shareholders to take up their entitlements, so as to participate in and share the potential growth of the Group. The shareholding interest of Qualifying Shareholders who elect not to take up their entitlements may be diluted by a maximum of approximately 16.67%.

– 11 –

LETTER FROM THE BOARD

Basis of allotment of Offer Shares

One Offer Share for every five existing Shares held by a Qualifying Shareholder as at the close of business on the Record Date.

Status of the Offer Shares

When allotted, issued and fully paid, the Offer Shares will rank pari passu in all respects with the then existing Shares in issue and holders of such Offer Shares will be entitled to receive all future dividends and distributions which are declared, made and paid after the date of issue of the Offer Shares.

Fractions of Offer Shares

Fractional entitlements to the Offer Shares will not be issued but will be aggregated and made available for excess application. The Company will not allot any fractions of Offer Shares.

Applications for Excess Offer Shares

Qualifying Shareholders shall be entitled to apply for any entitlements of the NonQualifying Shareholders, any Offer Shares not taken up by Qualifying Shareholders and the abovementioned aggregated fractional entitlements. An application may be made by completing the Excess Application Form for Excess Offer Shares and lodging the same with a separate remittance for the Excess Offer Shares being applied for before the Latest Acceptance Time.

The Directors will allocate the Excess Offer Shares at their discretion on a fair and equitable basis based on the following principles:

• (1) preference will be given to applications for less than a board lot of Offer Shares where they appear to the Directors that such applications are made to round up odd-lot to whole board lot and that such applications are not made with intention to abuse this mechanism; and

• (2) subject to availability of excess Offer Shares after allocation under principle (1) above, the excess Offer Shares will be allocated to Qualifying Shareholders based on a sliding scale with reference to the number of the Excess Offer Shares applied by each Qualifying Shareholder (i.e. Qualifying Shareholders applying for smaller number of Offer Shares are allocated with a higher percentage of successful application but will receive less number of Offer Shares; whereas Qualifying Shareholders applying for larger number of Offer Shares are allocated with smaller percentage of successful application but will receive higher number of Offer Shares) and with board lot allocations to be made on best effort basis.

Shareholders with their Shares held by a nominee (or CCASS) should note that the Board will regard the nominee (including CCASS) as a single Shareholder according to the register of members of the Company.

– 12 –

LETTER FROM THE BOARD

Arrangement for odd lot matching services

In order to facilitate the trading of odd lots of Offer Shares as a result of the Open Offer, the Company has appointed Pacific Foundation Securities Limited to provide matching service to the Shareholders who wish to either to dispose of or top-up their odd lots of Shares from Wednesday, 18 June 2008 up to and including Friday, 18 July 2008. Shareholders who wish to take advantage of this facility should contact Mr. Sam Ng of Pacific Foundation Securities Limited at 11/F, New World Tower II, 16–18 Queen’s Road Central, Hong Kong (telephone number: 2530 3338) during the aforesaid period. Shareholders should note that the matching of the sale and purchase of odd lots of Shares is not guaranteed.

Shareholders are recommended to consult their professional advisers if they are in any doubt about the matching facility described above.

Certificates and refund cheques for the Offer Shares

Subject to the fulfillment of the conditions of the Open Offer, as set out in the paragraph headed ‘‘Conditions of the Open Offer’’ below, certificates for all fully-paid Offer Shares are expected to be posted by Wednesday, 18 June 2008 by ordinary post to those Qualifying Shareholders who have accepted and (where applicable) applied for, and paid for the Offer Shares, at their own risk. Refund cheques in respect of the wholly or partially unsuccessful applications for Excess Offer Shares (if any) are expected to be posted by Wednesday, 18 June 2008 by ordinary post to the applicants at their own risk.

Application for Listing

The Company will apply to the Listing Committee for the listing of, and permission to deal in, the Offer Shares. Dealings in the Offer Shares on the Stock Exchange will be subject to the payment of stamp duties and relevant trading fees and Securities and Futures Commission transaction levy in Hong Kong.

CONDITIONS OF THE OPEN OFFER

Completion of the Open Offer is conditional upon, among others, fulfillment of each of the following conditions:

• (1) all necessary approvals, permits, waivers, consents and all the authorisations, if required, having been obtained for the Open Offer and the issue of the Offer Shares;

• (2) the delivery to the Stock Exchange and filing and registration of all documents relating to the Open Offer required by the applicable laws and the Listing Rules to be filed and/or registered with the Registrar of Companies in Hong Kong and the Registrar of Companies in Bermuda on or before the Posting Date;

• (3) the posting of the Open Offer Documents to the Qualifying Shareholders on or before the Posting Date;

– 13 –

LETTER FROM THE BOARD

• (4) the Listing Committee granting or agreeing to grant the listing of, and permission to deal in, the Offer Shares either unconditionally or subject to such conditions as the Company may accept;

• (5) compliance with and performance of all the undertakings and obligations of the Company under the Underwriting Agreement;

• (6) compliance with and performance of all the undertakings and obligations of the Underwriter under the Underwriting Agreement; and

• (7) the Underwriting Agreement becoming unconditional and not being terminated by the Underwriter in accordance with the terms thereof.

If any of the conditions of the Open Offer is not fulfilled by or at the time and/or date specified therefor (or if no time or date is specified, 19 June 2008, or such other time as may be agreed between the Underwriter and the Company), or shall become incapable of being fulfilled on or before such time, or the Underwriting Agreement is terminated by the Underwriter by written notice to the Company pursuant to the terms of the Underwriting Agreement, in which cases the Open Offer will not proceed.

UNDERWRITING ARRANGEMENT

Any Offer Share not taken up by the Qualifying Shareholders, other than Best Grade, will be underwritten by the Underwriter pursuant to the terms of the Underwriting Agreement.

Date : 30 April 2008 Issuer : the Company Underwriter : Best Grade

• Number of Underwritten Shares : all of the Offer Shares, but effectively not less than 40,395,963 and not more than 41,208,963 Offer Shares (see Note (1))

• Commission : Nil

Note (1): The Underwriter has agreed to underwrite all of the Offer Shares in accordance with the terms of the Underwriting Agreement. However, as a result of the undertaking of Best Grade, Dayspring, Mr. Lam and Ms. Yeung to take up their pro rata entitlement under the Open Offer, the underwriting obligations under the Underwriting Agreement is effectively limited to the number of Underwritten Shares.

Pursuant to the Underwriting Agreement, Best Grade, being the Underwriter, has agreed to subscribe or procure the subscription for all of the Offer Shares but has effectively agreed to subscribe or procure the subscription for all of the Underwritten Shares only for

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LETTER FROM THE BOARD

reasons set out in Note (1) above. The aggregate value of such Underwritten Shares amounts to not more than approximately HK$14.42 million and not less than approximately HK$14.14 million at the Subscription Price.

The entire issued share capital of Best Grade is held by Masterline Industrial Limited as trustee of The New Super Star Unit Trust. All except one unit in The New Super Star Unit Trust are beneficially owned by two discretionary trusts, the discretionary beneficiaries of which include Mr. Lam, Chairman of the Company and an executive Director, Ms. Yeung, Vice Chairman of the Company and an executive Director and Mr. Lam Chuen Yik, Kenneth. HSBC International Trustee Limited acted as trustee of the two discretionary trusts.

Conditions of the Underwriting Agreement

The obligations of the Underwriter under the Underwriting Agreement are conditional on the fulfillment or waiver of the following conditions precedent on or before the Back Stop Date:

• (i) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment), and not having revoked, the listing of, and permission to deal in, the Offer Shares;

• (ii) the delivery to the Stock Exchange and registration by the Registrar of Companies in Hong Kong not later than the Posting Date of one copy of each of the Open Offer Documents each duly certified by two of the Directors (or by their duly authorised agents in writing) and the Secretary of the Company as having been approved by resolution by the Board (and all documents required to be attached thereto, if any) in compliance with the Listing Rules and the Companies Ordinance;

• (iii) the filing of one duly certified (by or on behalf of each Director) copy of the Open Offer Documents with the Registrar of Companies in Bermuda;

• (iv) the posting of the Open Offer Documents to Qualifying Shareholders;

• (v) the delivery to the Underwriter of those documents listed in the schedule of the Underwriting Agreement, when specified therein; and

• (vi) the obtaining of the permission of the Bermuda Monetary Authority, if required, for the issue of the Offer Shares.

In the event of the above conditions not being fulfilled or waived on or before the Back Stop Date (or such later date or dates as may be agreed between the Company and the Underwriter) or if the Underwriting Agreement shall be rescinded, all obligations and liabilities of the parties thereunder will forthwith cease and determine and neither party will have any claim against the other (save in respect of any antecedent breaches thereof).

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LETTER FROM THE BOARD

WARNING OF THE RISKS OF DEALING IN SHARES

Shares have been dealt with on an ex-entitlement basis since Monday, 19 May 2008.

Shareholders and potential investors of the Company should note that the Open Offer is conditional upon the fulfillment of all the conditions set out under the paragraph headed ‘‘Conditions of the Open Offer’’ and the Underwriting Agreement having become unconditional and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof (a summary of which is set out under the section headed ‘‘Termination of the Underwriting Agreement’’ in this Prospectus). Accordingly, the Open Offer may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the Shares. If in any doubt, investors should consider obtaining professional advice on this.

IRREVOCABLE UNDERTAKING BY THE CONTROLLING SHAREHOLDERS

As at the Latest Practicable Date, (i) Best Grade is the beneficial owner of 224,222,174 Shares, representing approximately 52.11%; (ii) Dayspring is the beneficial owner of 844,000 Shares, representing approximately 0.20%; (iii) Mr. Lam is the beneficial owner of 2,150,000 Shares, representing approximately 0.50%; and (iv) Ms. Yeung is the beneficial owner of 1,100,000 Shares, representing approximately 0.26% respectively of the issued share capital of the Company.

Best Grade, Dayspring, Mr. Lam and Ms. Yeung have irrevocably respectively to subscribe for their pro rata entitlement under the Open Offer, being an aggregate of not less than 45,663,234 Offer Shares and not more than 46,203,234 Offer Shares.

As at the Latest Practicable Date, other than the abovementioned undertaking, the Company has not received any undertaking provided by any other Shareholders to subscribe for his/her/its entitlement under the Open Offer.

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LETTER FROM THE BOARD

CHANGES IN SHAREHOLDING STRUCTURE OF THE COMPANY

The following table sets out the changes in the shareholding structure of the Company arising from the Open Offer:

Shareholder Mr. Lam Ms. Yeung Dayspring Best Grade Other Directors and connected persons Public — holders of Share Options other than Directors — existing public Shareholders Total	As at the Latest Practicable Date Number of Shares Approximate % 2,150,000 0.50 1,100,000 0.26 844,000 0.20 224,222,174 52.11 12,325,819 2.86 0 0.00 189,653,996 44.07 430,295,989 100.00%	Immediately after completion of the Open Offer assuming all Shareholders take up their respective allotment of the Offer Shares in full and no Share Option is exercised before the Record Date Number of Shares Approximate % 2,580,000 0.50 1,320,000 0.26 1,012,800 0.20 269,066,608 52.11 14,790,982 2.86 0 0.00 227,584,796 44.07 516,355,186 100.00%	Immediately after completion of the Open Offer assuming all Shareholders take up their respective allotment of the Offer Shares in full and 6,765,000 Share Options (Note) are exercised before the Record Date Number of Shares Approximate % 4,380,000 0.84 2,760,000 0.53 1,012,800 0.19 269,066,608 51.30 16,590,982 3.16 3,078,000 0.59 227,584,796 43.39 524,473,186 100.00%	Immediately after completion of the Open Offer assuming no Shareholder takes up any of the Underwritten Shares, all Underwritten Shares are taken up by the Underwriter and no Share Option is exercised before the Record Date Number of Shares Approximate % 2,580,000 0.50 1,320,000 0.26 1,012,800 0.20 309,462,571 59.93 12,325,819 2.38 0 0.00 189,653,996 36.73 516,355,186 100.00%	Immediately after completion of the Open Offer assuming no Shareholder takes up any of the Underwritten Shares, all Underwritten Shares are taken up by the Underwriter and 6,765,000 Share Options (Note) are exercised before the Record Date Number of Shares Approximate % 4,380,000 0.84 2,760,000 0.53 1,012,800 0.19 310,275,571 59.16 13,825,819 2.63 2,565,000 0.49 189,653,996 36.16 524,473,186 100.00%	Immediately after completion of the Open Offer assuming no Shareholder takes up any of the Underwritten Shares, all Underwritten Shares are taken up by the Underwriter and 6,765,000 Share Options (Note) are exercised before the Record Date Number of Shares Approximate % 4,380,000 0.84 2,760,000 0.53 1,012,800 0.19 310,275,571 59.16 13,825,819 2.63 2,565,000 0.49 189,653,996 36.16 524,473,186 100.00%
						100.00%

Note: These 6,765,000 Share Options are held as to 1,500,000 Share Options by Mr. Lam, 1,200,000 Share Options by Ms. Yeung, 1,500,000 Share Option by other Directors and 2,565,000 Share Options by other employees of the Group.

BUSINESS REVIEW AND PROSPECTS

The Group is principally engaged in printing and manufacturing of packaging materials, children’s pictures and novelty books, paper products and labels, environmentally friendly products, and the provision of design, photographic and colour separation services.

For the year ended 31 March 2007, the Group recorded a turnover of approximately HK$1,128 million. Profit for the year attributable to equity holders of the Company was approximately HK$33 million. The Group’s basic earnings per share was HK7.58 cents.

For the six months ended 30 September 2007, turnover of the Group amounted to approximately HK$626 million, a decrease of 1% compared with the same period last year. Net profit increased by 5% to approximately HK$30 million.

In the near future, the Group is striving to capture the business opportunities brought by the modest expansion of the economy in the People’s Republic of China while preparing for unexpected downturns. In view of the global phenomena of growing competition and

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LETTER FROM THE BOARD

shrinking profit margin, the Group is exploring new measures to add value to its operations and to build up new edges to differentiate itself from its competitors. The management will prudently explore these initiatives in the best interests of the Shareholders.

REASONS FOR THE OPEN OFFER AND USE OF PROCEEDS

The net proceeds of the Open Offer (after deduction of expenses) are expected to amount to approximately HK$28.8 million (assuming no exercise of the Share Options on or before the Record Date) or approximately HK$29.3 million (assuming the Share Options are being exercised on or before the Record Date), and will be used for general working capital of the Group.

The estimated expense in relation to the Open Offer, including financial, legal and other professional advisory fees, printing and translation expenses, of approximately HK$1.3 million, will be borne by the Company. The Group intends to strengthen its financial position by the Open Offer, which will enable the Company to expand its capital base. The Directors also consider that it is in the interests of the Company and its Shareholders to raise capital to meet the Group’s funding requirements by way of the Open Offer, which will allow all Qualifying Shareholders the opportunity to maintain their respective pro rata shareholding interests in the Company.

The Group did not carry out any capital raising activities within the last 12 months prior to the Latest Practicable Date.

ADJUSTMENTS IN RELATION TO THE SHARE OPTION SCHEME

As at the Latest Practicable Date, there are 6,765,000 Share Options outstanding and exercisable. Pursuant to the terms of the Share Option Scheme, the exercise prices and the number of Shares to be issued under the Share Options will be adjusted in accordance with the Share Option Scheme upon the Open Offer becoming unconditional. The Company appointed Hercules Capital Limited to review and confirm the basis of such adjustments (if any) to the Share Options comply with Chapter 17 of the Listing Rules and the supplementary guidance issued by the Stock Exchange on 5 September 2005 and comply with such other requirements as prescribed in accordance with the rules of the Share Option Scheme. The Company will inform the holders of the Share Options of the adjustments (if any) as a result of the Open Offer.

PROCEDURE FOR APPLICATION

Application for Offer Shares

The Application Form is enclosed with this Prospectus which entitles the Qualifying Shareholders to whom it is addressed to apply for the number of Offer Shares as shown therein subject to payment in full by the Latest Acceptance Time. Qualifying Shareholders should note that they may apply for any number of Offer Shares only up to the number set out in the Application Form.

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LETTER FROM THE BOARD

If Qualifying Shareholders wish to apply for all the Offer Shares offered to them as specified in the Application Form or wish to apply for any number less than their entitlements under the Open Offer, they must complete, sign and lodge the Application Form in accordance with the instructions printed thereon, together with remittance for the full amount payable in respect of such number of Offer Shares they have applied for with, Tricor Secretaries Limited at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong by not later than 4: 00 p.m. on Tuesday, 10 June 2008. All remittance(s) must be made in Hong Kong dollars and cheques must be drawn on an account with, or bankers’ cashier’s orders must be issued by, a licensed bank in Hong Kong and made payable to ‘‘Starlite Holdings Limited — Open Offer Account’’ and crossed ‘‘Account Payee Only’’.

It should be noted that unless the duly completed and signed Application Form, together with the appropriate remittance, have been lodged with, Tricor Secretaries Limited by not later than 4: 00 p.m. on Tuesday, 10 June 2008, the entitlements of the respective Qualifying Shareholders under the Open Offer and all rights in relation thereto shall be deemed to have been declined and will be cancelled.

Application for Excess Offer Shares

Qualifying Shareholders may apply, by way of excess application, for any Offer Shares entitled by the Qualifying Shareholders but not validly applied for by them, any Offer Shares arising from the aggregation of fractional entitlements and any Offer Shares not offered to the Non-Qualifying Shareholders.

Application for Excess Offer Shares should be made by completing the Excess Application Form enclosed with this Prospectus for Excess Offer Shares and lodging the same with a separate remittance for the full amount payable in respect of the Excess Offer Shares being applied for in accordance with the instructions printed thereon, with Tricor Secretaries Limited at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong by not later than 4: 00 p.m. on Tuesday, 10 June 2008. All remittances must be made in Hong Kong dollars and cheques must be drawn on an account with, or bankers’ cashier’s orders must be issued by, a licensed bank in Hong Kong and made payable to ‘‘Starlite Holdings Limited — Excess Application Account’’ and crossed ‘‘Account Payee Only’’. The share registrar of the Company and transfer office will notify the Qualifying Shareholders of any allotment of the Excess Offer Shares made to them.

It should be noted that unless the duly completed and signed Excess Application Form, together with the appropriate remittance, have been lodged with the registrar by not later than 4: 00 p.m. on Tuesday, 10 June 2008, the Excess Application Form is liable to be rejected.

All cheques or bankers’ cashier’s orders will be presented for payment immediately following receipt and all interest earned on such application monies will be retained for the benefit of the Company. Any Application Form or Excess Application Form in respect of which the cheque or bankers’ cashier’s order is dishonoured on first presentation is liable to be rejected, and in that event the relevant entitlements of the Qualifying Shareholders under the Open Offer will be deemed to have been declined and will be cancelled.

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LETTER FROM THE BOARD

In the event that applications are received for the Offer Shares in excess of provisional entitlements, the Directors will allocate the Offer Shares in excess of provisional entitlements at their discretion, but on a fair and reasonable basis based on the principles as stated under the section headed ‘‘Application for Excess Offer Shares’’ above.

Both Application Form and Excess Application Form are for the use by the person(s) named therein only and are not transferable.

No receipt will be issued in respect of any application monies received.

Any Offer Shares not applied for by the Qualifying Shareholders will be taken up by the Underwriter.

The Shareholders with their Shares held by a nominee company should note that the Board will regard the nominee as a single Shareholder according to the register of members of the Company.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information contained in the Appendices to this Prospectus.

Yours faithfully, For and on behalf of the Board Starlite Holdings Limited Lam Kwong Yu Chairman

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

I. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

The following is a summary of the consolidated results of the Group for the three years ended 31 March 2005, 2006 and 2007, and the consolidated balance sheets as at 31 March 2005, 2006 and 2007 as extracted from the published annual reports of the Company for the two years ended 31 March 2006 and 2007.

Consolidated income statements

For the year ended 31 March

Revenue Cost of sales Gross profit Other gains — net Selling and distribution costs General and administrative expenses Operating profit Finance costs — net Profit before income tax Income tax expense Profit for the year, attributable to equity holders of the Company Earnings per share for profit attributable to equity holders of the Company during the year (expressed in HK cents per share) — Basic — Diluted Dividends	2005 HK$’000 850,787 (629,584) 221,203 1,045 (47,058) (88,256) 86,934 (6,224) 80,710 (17,906) 62,804 14.77 14.73 17,079	2006 HK$’000 907,054 (700,549) 206,505 1,609 (50,367) (90,746) 67,001 (13,389) 53,612 (22,484) 31,128 7.27 7.26 12,884	2007 HK$’000 1,128,021 (881,378) 246,643 393 (62,913) (125,194) 58,929 (17,304) 41,625 (9,084) 32,541 7.58 7.58 12,884

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Consolidated balance sheets

As at 31 March

ASSETS Non-current assets Leasehold land and land use rights Property, plant and equipment Other non-current assets Current assets Inventories Trade and bills receivable Prepayments and deposits Pledged bank deposits Cash and cash equivalents LIABILITIES Current liabilities Borrowings Finance lease obligations, current portion Trade and bills payable Accruals and other payables Current income tax liabilities Net current assets Total assets less current liabilities	2005 HK$’000 28,623 333,729 968 363,320 - - - - - - - - - 72,697 141,664 27,214 12,306 79,926 333,807 - - - - - - - - - 91,887 9,455 122,140 47,695 14,928 286,105 - - - - - - - - - 47,702 - - - - - - - - - 411,022 - - - - - - - - -	2006 HK$’000 26,413 418,904 1,180 446,497 - - - - - - - - - 85,136 176,753 25,064 — 89,812 376,765 - - - - - - - - - 119,663 7,655 134,494 41,993 18,015 321,820 - - - - - - - - - 54,945 - - - - - - - - - 501,442 - - - - - - - - -	2007 HK$’000 26,825 448,017 1,543
			476,385 - - - - - - - - - 105,274 195,017 15,094 — 107,043
			422,428 - - - - - - - - - 172,529 2,565 154,211 49,260 22,035
			400,600 - - - - - - - - -
			21,828 - - - - - - - - -
			498,213 - - - - - - - - -

– 22 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Non-current liabilities Borrowings Finance lease obligations, non-current portion Deferred income tax liabilities Net assets EQUITY Capital and reserves attributable to equity holders of the Company Share capital Reserves Shareholders’ equity	2005 HK$’000 60,510 6,380 17,301 84,191 - - - - - - - - - 326,831 42,517 284,314 326,831	2006 HK$’000 135,135 5,092 15,794 156,021 - - - - - - - - - 345,421 42,947 302,474 345,421	2007 HK$’000 106,974 2,858 13,303
			123,135 - - - - - - - - -
			375,078
			42,947 332,131
			375,078

– 23 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

II. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP

Set out below are the audited consolidated financial statements of the Group for the year ended 31 March 2007 together with the relevant notes thereto as extracted from the Company’s published annual report for the year ended 31 March 2007.

Consolidated income statement

For the year ended 31st March, 2007

Note Revenue 5 Cost of sales 7 Gross profit Other gains — net 6 Selling and distribution costs 7 General and administrative expenses 7 Operating profit Finance costs — net 8 Profit before income tax Income tax expense 11 Profit for the year, attributable to equity holders of the Company 12 Earnings per share for profit attributable to equity holders of the Company during the year (expressed in HK cents per share) 13 — Basic — Diluted Dividends 14	2007 HK$’000 1,128,021 (881,378) 246,643 393 (62,913) (125,194) 58,929 (17,304) 41,625 (9,084) 32,541 7.58 7.58 12,884	2006 HK$’000 907,054 (700,549) 206,505 1,609 (50,367) (90,746) 67,001 (13,389) 53,612 (22,484) 31,128 7.27 7.26 12,884

The accompanying notes are an integral part of these consolidated financial statements.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Balance sheets

As at 31st March, 2007

Note ASSETS Non-current assets Leasehold land and land use rights 15 Property, plant and equipment 16 Investments in and amounts due from subsidiaries 17 Other non-current assets Current assets Inventories 18 Trade and bills receivable 19 Prepayments and deposits Cash and cash equivalents 20 LIABILITIES Current liabilities Borrowings 21 Finance lease obligations, current portion 22 Trade and bills payable 23 Accruals and other payables Current income tax liabilities Net current assets/(liabilities) Total assets less current liabilities	Consolidated 2007 2006 HK$’000 HK$’000 26,825 26,413 448,017 418,904 — — 1,543 1,180 476,385 446,497 - - - - - - - - - - - - - - - - 105,274 85,136 195,017 176,753 15,094 25,064 107,043 89,812 422,428 376,765 - - - - - - - - - - - - - - - - 172,529 119,663 2,565 7,655 154,211 134,494 49,260 41,993 22,035 18,015 400,600 321,820 - - - - - - - - - - - - - - - - 21,828 54,945 - - - - - - - - - - - - - - - - 498,213 501,442 - - - - - - - - - - - - - - - -	Company 2007 2006 HK$’000 HK$’000 — — — — 244,523 244,934 — — 244,523 244,934 - - - - - - - - - - - - - - - - — — — — 702 739 280 71 982 810 - - - - - - - - - - - - - - - - — — — — — — 1,040 1,095 14 — 1,054 1,095 - - - - - - - - - - - - - - - - (72) (285) - - - - - - - - - - - - - - - - 244,451 244,649 - - - - - - - - - - - - - - - -

– 25 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note Non-current liabilities Borrowings 21 Finance lease obligations, non-current portion 22 Deferred income tax liabilities 24 Amounts due to subsidiaries 17 Net assets EQUITY Capital and reserves attributable to equity holders of the Company Share capital 25 Reserves 27 Shareholders’ equity	Consolidated 2007 2006 HK$’000 HK$’000 106,974 135,135 2,858 5,092 13,303 15,794 — — 123,135 156,021 - - - - - - - - - - - - - - - - 375,078 345,421 42,947 42,947 332,131 302,474 375,078 345,421	Company 2007 2006 HK$’000 HK$’000 — — — — — — 85,703 73,178 85,703 73,178 - - - - - - - - - - - - - - - - 158,748 171,471 42,947 42,947 115,801 128,524 158,748 171,471	Company 2007 2006 HK$’000 HK$’000 — — — — — — 85,703 73,178 85,703 73,178 - - - - - - - - - - - - - - - - 158,748 171,471 42,947 42,947 115,801 128,524 158,748 171,471
			73,178 - - - - - - - -
			171,471
			42,947 128,524
			171,471

The accompanying notes are an integral part of these consolidated financial statements.

– 26 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Consolidated statement of changes in equity

For the year ended 31st March, 2007

Note Balance at 31st March, 2006 Fair value gains Currency translation differences Net income recognised directly in equity Profit for the year Total recognised income for the year Employee share options scheme — Value of employee services Dividends paid Balance at 31st March, 2007 Balance at 1st April, 2005 Fair value gains Currency translation differences Net income recognised directly in equity Profit for the year Total recognised income for the year Employee share options scheme — Value of employee services — Issue of shares upon exercise of employee share options 25 Dividends paid Balance at 31st March, 2006

Attributable to equity holders of the Company Share capital Reserves Total HK$’000 HK$’000 HK$’000 42,947 302,474 345,421 - - - - - - - - - - - - - - - - - - - - - - - - - - - — 363 363 — 9,476 9,476 — 9,839 9,839 — 32,541 32,541 — 42,380 42,380 ~~- - - - - - - - -~~ ~~- - - - - - - - -~~ ~~- - - - - - - - -~~ 42,947 344,854 387,801 — 161 161 — (12,884) (12,884) 42,947 332,131 375,078 42,517 283,130 325,647 - - - - - - - - - - - - - - - - - - - - - - - - - - - — 127 127 — 1,697 1,697 — 1,824 1,824 — 31,128 31,128 — 32,952 32,952 - - - - - - - - - - - - - - - - - - - - - - - - - - - 42,517 316,082 358,599 — 693 693 430 2,840 3,270 — (17,141) (17,141) - - - - - - - - - - - - - - - - - - - - - - - - - - - 42,947 302,474 345,421

The accompanying notes are an integral part of these consolidated financial statements.

– 27 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Consolidated cash flow statement

For the year ended 31st March, 2007

Note Cash flows from operating activities Cash inflow generated from operations 28(a) Interest paid Hong Kong profits tax paid Overseas income tax paid Hong Kong income tax refunded Overseas income tax refunded Net cash generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment 28(b) Decrease in pledged bank deposits Interest received Translation adjustments Net cash used in investing activities Cash flows from financing activities Proceeds from exercise of employee share options New long-term bank loans Repayment of long-term bank loans New short-term bank loans Repayment of short-term bank loans Repayment of capital element of finance lease obligations Dividends paid Translation adjustments Net cash provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents, beginning of year Effect of foreign exchange rate changes Cash and cash equivalents, end of year 20	2007 HK$’000 118,220 (18,451) (10,427) (7,949) 6,943 1,268 89,604 - - - - - - - - - (73,989) 150 — 1,147 (4,180) (76,872) - - - - - - - - - — 29,155 (62,139) 342,450 (286,434) (7,717) (12,884) 2,319 4,750 ~~- - - - - - - - -~~ 17,482 89,307 — 106,789	2006 HK$’000 80,931 (14,024) (12,706) (4,646) — 969 50,524 - - - - - - - - - (128,301) 315 12,511 635 (3,780) (118,620) - - - - - - - - - 3,270 142,000 (47,210) 333,737 (325,955) (10,509) (17,141) 1,233 79,425 ~~- - - - - - - - -~~ 11,329 78,184 (206) 89,307

The accompanying notes are an integral part of these consolidated financial statements.

– 28 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Notes to the consolidated financial statements

1. GENERAL INFORMATION

Starlite Holdings Limited (the ‘‘Company’’) is an investment holding company. Its subsidiaries are principally engaged in the printing and manufacturing of packaging materials, labels, paper products and environmentally friendly products.

The Company was incorporated in Bermuda on 3rd November, 1992, as an exempted company with limited liability under the Companies Act 1981 of Bermuda. The address of its registered office is Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda. The Company’s shares have been listed on The Stock Exchange of Hong Kong Limited since 1993.

The Company’s Directors regard Best Grade Advisory Limited, a company incorporated in the British Virgin Islands, to be the ultimate holding company.

These consolidated financial statements are presented in Hong Kong Dollars (‘‘HK$’’), unless otherwise stated.

These consolidated financial statements were approved for issue by the Company’s Board of Directors on 9th July, 2007.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements comprise the consolidated and the Company balance sheets at 31st March, 2007, and the consolidated income statement, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied in all the years presented, unless otherwise stated.

2.1 Basis of preparation

These consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (‘‘HKFRS’’). They have been prepared under the historical cost convention.

The preparation of financial statements in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where judgements and estimates are significant to the consolidated financial statements, are disclosed in Note 4. These estimates and judgement affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Although these estimates are based on management’s best knowledge of events and actions, actual results ultimately may differ from those estimates.

– 29 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

• (a) Amendments to and interpretations of published standards effective in 2006 and relevant to the Group’s operations

The following amendments and interpretations are mandatory for accounting periods beginning on or after 1st January, 2006 and are relevant to the Group’s operations:

• . Amendment to HKAS 39 and HKFRS 4, Amendment ‘‘Financial Guarantee Contracts’’. This amendment requires issued financial guarantees, other than those previously asserted by the entity to be insurance contracts, to be initially recognised at their fair value, and subsequently measured at the higher of (i) the unamortised balance of the related fees received and deferred, and (ii) the expenditure required to settle the commitment at the balance sheet date. The adoption of this amendment does not have a significant impact on the Group’s financial statements.

• . HK(IFRIC)-Int 4 ‘‘Determining Whether an Arrangement Contains a Lease’’. It requires the determination of whether an arrangement is or contains a lease to be based on the substance of the arrangement. It requires an assessment of whether: (i) fulfillment of the arrangement is dependent on the use of a specific asset or assets (the asset); and (ii) the arrangement conveys a right to use the asset. The adoption of this interpretation does not have a significant impact on the Group’s financial statements.

• . HKAS 21 Amendment ‘‘Net Investment in a Foreign Operation’’. This amendment permits inter-company loans denominated in any currency to be part of a net investment in a foreign operation, and therefore any relating exchange difference to be treated as equity in the consolidated financial statements. Previously such loans had to be denominated in the functional currency of one of the parties to the transactions. The adoption of this amendment does not have a significant impact on the Group’s financial statements.

• (b) New standards and interpretations to existing standards that are not effective and have not been early adopted by the Group

The following are the new standards and interpretations to existing standards that have been published and are mandatory for accounting periods beginning on or after 1st May, 2006 or later periods that the Group has not early adopted:

• . HKFRS 7 ‘‘Financial Instruments: Disclosures’’ (effective for annual periods beginning on or after 1st January, 2007), HKAS 1 ‘‘Amendments to capital disclosures’’ (effective for annual periods beginning on or after 1st January, 2007). HKFRS 7 introduces new disclosures relating to financial instruments. The Group has assessed the impact of HKFRS 7 and the amendment to HKAS 1 and concluded that the main additional disclosures will be the sensitivity analysis to market risk and capital disclosures required by the amendment of HKAS 1. The Group will adopt HKFRS 7 and the amendment to HKAS 1 for annual periods beginning 1st April, 2007.

• . HKFRS 8 ‘‘Operating Segments’’ (effective for accounting periods beginning on or after 1st January, 2009). HKFRS 8 supersedes HKAS 14, ‘‘Segment Reporting’’, which requires segments to be reported based on the Group’s internal reporting pattern as they represent components of the Group regularly reviewed by management. Management considers the adoption of HKFRS 8 will have no significant impact on the segment disclosures of the Group. The Group will apply HKFRS 8 from 1st April, 2009.

• . HK(IFRIC)-Int 8 ‘‘Scope of HKFRS 2’’ (effective for annual periods beginning on or after 1st May, 2006). HK(IFRIC)-Int 8 requires consideration of transactions involving the issuance of equity instruments — where the identifiable consideration received is less

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FINANCIAL INFORMATION OF THE GROUP

than the fair value of the equity instruments issued — to establish whether or not they fall within the scope of HKFRS 2. The Group will apply HK(IFRIC)-Int 8 from 1st April, 2007, but it is not expected to have any significant impact on the Group’s financial statements.

• . HK(IFRIC)-Int 9 ‘‘Reassessment of Embedded Derivatives’’ (effective for annual periods beginning on or after 1st June, 2006). Management believes that this interpretation should not have significant impact on the Group’s accounting policies as the Group has already assessed whether embedded derivatives should be separated using principles consistent with HK(IFRIC)-Int 9. The Group will apply HK(IFRIC)Int 9 from 1st April, 2007.

• . HK(IFRIC)-Int 10 ‘‘Interim Financial Reporting and Impairment’’ (effective for annual periods beginning on or after 1st November, 2006). HK(IFRIC)-Int 10 prohibits the impairment losses recognised in an interim period on goodwill, investments in equity instruments and investments in financial assets carried at cost to be reversed at a subsequent balance sheet date. The Group will apply HK(IFRIC)-Int 10 from 1st April, 2007, but it is not expected to have any significant impact on the Group’s financial statements.

• . HK(IFRIC)-Int 11 ‘‘HKFRS 2 — Group and Treasury Share Transfer’’ (effective for annual periods beginning on or after 1st April, 2007). This interpretation addresses how certain share-based payment arrangements between group companies should be accounted for in the financial statements. The Group will apply HK(IFRIC)-Int 11 from 1st April, 2007 but it is not expected to have any significant impact on the Group’s financial statements.

• (c) Interpretations to existing standards that are not yet effective and not relevant to the Group’s operations

The following interpretation to an existing standard has been published that is mandatory for accounting periods beginning on or after 1st January, 2008 and is not relevant for the Group’s operations:

• . HK(IFRIC)-Int 12 ‘‘Service Concession Arrangement’’. This interpretation sets out general principles on recognising and measuring the obligation and related rights in service concession arrangements. The Group has no service concession arrangements and management considers the interpretation is not relevant to the Group.

• (d) Standards, amendments and interpretations effective for accounting periods beginning on 1st April, 2006 but not relevant to the Group’s operations

The following standards, amendments and interpretations are mandatory for accounting periods beginning on or after 1st January, 2006 but are not relevant to the Group’s operations:

• . HKAS 19 Amendment ‘‘Employee Benefits’’

• . HKAS 39 Amendment ‘‘Cash Flow Hedge Accounting of Forecast Intragroup Transactions’’

• . HKFRS 1 Amendment ‘‘First-time adoption of Hong Kong Financial Reporting Standards’’

• . HK(IFRIC)-Int 5 ‘‘Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds’’

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FINANCIAL INFORMATION OF THE GROUP

• . HK(IFRIC)-Int 6 — ‘‘Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic Equipment’’

• . HK(IFRIC)-Int 7 ‘‘Applying the Restatement Approach under HKAS 29, Financial Reporting in Hyperinflationary Economics’’

2.2 Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31st March.

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

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

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

In the Company’s balance sheet, the investments in subsidiaries are stated at cost less accumulated impairment losses, if any. The results of subsidiaries are accounted by the Company on the basis of dividends received and receivable.

2.3 Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

2.4 Foreign currency translation

• (a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘‘functional currency’’). The consolidated financial statements are presented in Hong Kong Dollars (‘‘HK$’’), which is the Company’s functional and presentation currency.

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FINANCIAL INFORMATION OF THE GROUP

• (b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

(c) Group companies

The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• (i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

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

• (iii) all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities or operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

2.5 Leasehold land and land use rights

The up-front prepayments made for leasehold land and land use rights are accounted for as operating leases. They are expensed in the income statement on a straight-line basis over the periods of the lease, or when there is impairment, the impairment is expensed in the income statement.

2.6 Property, plant and equipment

Property, plant and equipment other than construction in progress are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

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

Depreciation of property, plant and equipment is calculated using the straight-line method to allocate their costs less their residual values over their estimated useful lives, as follows:

—	Buildings	25 to 50 years
—	Plant and machinery	5 to 10 years
—	Furniture and equipment	5 to 10 years
—	Motor vehicles	5 years

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FINANCIAL INFORMATION OF THE GROUP

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

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Construction in progress comprises buildings on which construction work has not been completed and plant and machinery on which installation work has not been completed. It is carried at cost which includes construction and installation expenditures and other direct costs less any impairment losses. On completion, construction in progress is transferred to the appropriate categories of property, plant and equipment at cost less accumulated impairment losses. No depreciation is provided for construction in progress until it is completed and available for use.

Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised in the income statement.

2.7 Impairment of investments in subsidiaries and non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Assets other than goodwill that suffer an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.8 Financial assets

The Group classifies its financial assets in the following categories: derivative financial instruments at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(a) Derivative financial instruments

The Group’s derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the income statement within ‘‘other gains/losses’’ in the income statement.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months in which case they are classified as non-current assets.

Loan and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment, if any. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

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FINANCIAL INFORMATION OF THE GROUP

2.9 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.10 Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables and other receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtors, probability that the debtors will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the provision is recognised in the income statement within general and administrative expenses. When a receivable is uncollectible, it is written off against the allowance for receivables. Subsequent recoveries of amounts previously written off are credited against general and administrative expenses in the income statement.

2.11 Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.12 Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds.

2.13 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability, including fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

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

2.14 Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

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FINANCIAL INFORMATION OF THE GROUP

2.15 Deferred income tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

2.16 Employee benefits

(i) Employee leave entitlements

Employee entitlements to annual leave and long service leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave and long service leave as a result of services rendered by employees up to the balance sheet date. Employee entitlements to sick leave and maternity leave are not recognised until the time of the leave.

(ii) Retirement benefits

Group companies participate in various defined contribution retirement benefit schemes. A defined contribution plan is a retirement benefit scheme under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contribution for post-retirement benefits beyond these fixed contributions.

The schemes are generally funded through payments to insurance companies or trusteeadministered funds. The Group pays contributions on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employment costs when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(iii) Bonus plans

The Group recognises a liability and an expense for bonuses. It recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(iv) Share-based compensation

The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance sheet date,

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FINANCIAL INFORMATION OF THE GROUP

the Group revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment to equity over the remaining vesting period.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

2.17 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.

2.18 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Group’s activities. Revenue is shown, net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measured until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

(a) Sales of goods

Sales of goods are recognised when a group entity has delivered products to the customer, the customer has accepted the products and collectibility of the related receivables is reasonably assured.

• (b) Interest income

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

2.19 Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction, installation or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that asset. All other borrowing costs are charged to the income statement in the period in which they are incurred.

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FINANCIAL INFORMATION OF THE GROUP

2.20 Operating leases (as the lessee)

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

2.21 Contingent assets and contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of the obligation cannot be measured reliably. A contingent liability is not recognised but is disclosed in the financial statements. When a change in the probability of an outflow occurs so that outflow is probable, it will then be recognised as a provision.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Group. Contingent assets are not recognised but are disclosed in the notes to the financial statements when an inflow of economic benefits is probable. When inflow is virtually certain, an asset is recognised.

2.22 Financial guarantees

A financial guarantee (a type of insurance contract) is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the original or modified terms of a debt instruments. The Group does not recognise liabilities for financial guarantees at inception, but performs a liability adequacy test at each balance sheet date by comparing its net liability regarding the financial guarantee with the amount that would be required if the financial guarantee were to result in a present legal or constructive obligation. If the liability is less than its present legal or constructive obligation amount, the entire difference is recognised in the income statement immediately.

2.23 Dividend distributions

Dividend distributions to the Company’s shareholders are recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders.

3. FINANCIAL RISK MANAGEMENT

3.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: foreign exchange risk, credit risk, liquidity risk, and cash flow and fair value interest-rate risk.

Management regularly monitors the financial risks of the Group and uses derivative financial instruments to hedge certain foreign exchange risk exposures. Because of the simplicity of the financial structure and the current operations of the Group, no other hedging activities are undertaken except for some forward contracts to partially hedge the Group’s foreign exchange risk.

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FINANCIAL INFORMATION OF THE GROUP

(a) Foreign exchange risk

The Group is exposed to foreign exchange risk arising from the exposure of various currencies against Hong Kong Dollar, including the Chinese Renminbi, United States Dollar and Singapore Dollar. Such foreign exchange risk arises from future commercial transactions, recognised assets and liabilities, and net investments in operations in Mainland China and Singapore.

To manage foreign exchange risk arising from certain future commercial transactions and recognised liabilities, the Group uses forward contracts transacted with external financial institutions to partially hedge against such foreign exchange risk.

Chinese Renminbi is not a freely convertible currency in the international market and its exchange rate is determined by the People’s Bank of China.

(b) Credit risk

Credit risk arises from cash and cash equivalents, deposits with banks and derivative financial instruments, as well as credit exposures to customers, including outstanding receivables and committed transactions. For sales transactions, risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Derivative counter parties and cash transactions are limited to high-credit-quality financial institutions.

The Group has no significant concentrations of credit risk.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash, and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, the Group’s management aims to maintain flexibility in funding by keeping committed credit lines available.

(d) Cash flow and fair value interest-rate risk

Except for the bank deposits as at 31st March, 2007 of HK$17,416,000 held at effective interest rates ranging from 1.95% to 3.63% per annum, the Group has no significant interestbearing assets. The Group’s income and operating cash flows are substantially independent of changes in market interest rates.

The Group’s interest-rate risk arises from short-term and long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest-rate risk. The Group has made use of the lower cost Hong Kong Dollar loan facilities to finance its Chinese Renminbi-denominated commitments in Mainland China.

3.2 Fair value estimation

The fair values of forward currency contracts are determined using quoted forward exchange rates at the balance sheet date.

The carrying values less impairment provisions of trade receivables and payables are a reasonable approximation of their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

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FINANCIAL INFORMATION OF THE GROUP

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(a) Useful lives and residual values of property, plant and equipment

The Group’s management determines the estimated useful lives, residual values and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives and residual values of property, plant and equipment of similar nature and functions. Management will increase the depreciation charge where useful lives are less than previously estimated lives and it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold. Actual economic lives may differ from estimated useful lives and actual residual values may differ from estimated residual values. Periodic review could result in a change in depreciable lives and residual values and therefore depreciation expense in future periods.

(b) Impairment of property, plant and equipment, leasehold land and land use rights

Property, plant and equipment, leasehold land and land use rights are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amount are determined based on value-in-use calculations or market valuations. These calculations require the use of judgements and estimates.

Management judgement is required in the area of asset impairment particularly in assessing: (i) whether an event has occurred that may indicate that the related asset values may not be recoverable; (ii) whether the carrying value of an asset can be supported by the recoverable amount, being the higher of fair value less costs to sell or net present value of future cash flows which are estimated based upon the continued use of the asset in the business; and (iii) the appropriate key assumptions to be applied in preparing cash flow projections including whether these cash flow projections are discounted using an appropriate rate. Changing the assumptions selected by management in assessing impairment, including the discount rates or the growth rate assumptions in the cash flow projections, could materially affect the net present value used in the impairment test and as a result affect the Group’s financial condition and results of operations. If there is a significant adverse change in the projected performance and resulting future cash flow projections, it may be necessary to take an impairment charge to the income statement.

(c) Net realisable value of inventories

Net realisable value of inventories is the estimated selling price in the ordinary course of business, less estimated costs of completion and variable selling expenses. These estimates are based on current market conditions and the historical experience of manufacturing and selling products of a similar nature. It could change significantly as a result of changes in customer taste and competitor actions in response to industry cycles. Management reassesses these estimates at each balance sheet date.

(d) Trade, bills and other receivables

The Group’s management determines the provision for impairment of trade, bills and other receivables based on an assessment of the recoverability of the receivables. This assessment is based on the credit history of its customers and other debtors and current market conditions, and requires the use of judgements and estimates. Management reassesses the provision at each balance sheet date.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(e) Income taxes

The Group is subject to income taxes in several jurisdictions. There are certain transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax provisions in the period in which such determination is made. Deferred income tax assets relating to certain temporary differences and tax losses are recognised when management considers it is likely that future taxable profits will be available against which the temporary differences or tax losses can be utilised. When the expectations are different from the original estimates, such differences will impact the recognition of deferred tax assets and income tax charges in the period in which such estimates are changed.

(f) Employee benefits — share-based payments

The determination of the fair value of share options granted requires estimates in determining, among other things, the expected volatility of the share price, the expected dividend yield, the risk-free interest rate for the life of the option, and the number of options that are expected to become exercisable as stated in Note 26. Where the outcome of the number of options that are exercisable is different, such difference will impact the income statement in the subsequent remaining vesting periods of the relevant share options.

5. SEGMENT INFORMATION

(a) Revenue is analysed as follows:

Sales of packaging materials, labels, paper products and environmentally friendly products Others	2007 HK$’000 1,116,374 11,647 1,128,021	2006 HK$’000 902,688 4,366
		907,054

(b) Primary reporting format — business segment

The Company is an investment holding company. Its subsidiaries are principally engaged in the printing and manufacturing of packaging materials, labels, paper products and environmentally friendly products. No business segment information is provided as substantially all of the assets, sales and contribution to the Group’s results are attributable to the printing and manufacturing of packaging materials, labels, paper products and environmentally friendly products.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(c) Secondary reporting format — geographical segments

The Group primarily operates in Hong Kong, Mainland China and Singapore.

Analysis by geographical location is as follows:

Revenue1 — Hong Kong and Mainland China — Singapore — United States of America — Others	2007 HK$’000 488,078 140,103 339,482 160,358 1,128,021	2006 HK$’000 388,015 125,985 293,932 99,122
		907,054

• 1 Revenue by geographical location is determined by the destination of shipments/deliveries of merchandise.

Total assets Hong Kong and Mainland China Singapore	2007 HK$’000 813,489 85,324 898,813	2006 HK$’000 752,095 71,167
		823,262

Total assets are allocated based on where the assets are located.

Capital expenditure Hong Kong and Mainland China Singapore	2007 HK$’000 72,303 1,686 73,989	2006 HK$’000 128,253 48
		128,301

Capital expenditure is allocated based on where the assets are located.

6. OTHER GAINS — NET

Net exchange gain Net (loss)/gain on disposal of property, plant and equipment	2007 HK$’000 414 (21) 393	2006 HK$’000 1,332 277
		1,609

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FINANCIAL INFORMATION OF THE GROUP

7. EXPENSES BY NATURE

Expenses included in cost of sales, selling and distribution costs, and general and administrative expenses are analysed as follows:

Changes in inventories of finished goods and work in progress Raw materials and consumables used Sub-contracting charges Repairs and maintenance Freight and transportation Employment costs (including directors’ emoluments) (Note 9) Operating lease rentals of premises charged by — third parties — related parties (Note 32) Provision for/(Reversal of) impairment of receivables Write-down of inventories Amortisation of leasehold land and land use rights Depreciation of other property, plant and equipment — owned assets — assets held under finance leases Auditors’ remuneration Other expenses 8. FINANCE COSTS — NET Interest on bank loans wholly repayable within five years Interest element of finance leases Interest income from bank deposits	2007 HK$’000 1,357 581,327 40,302 11,609 36,054 223,817 12,255 58 19,280 2,344 487 54,880 2,580 1,674 81,461 1,069,485 2007 HK$’000 17,917 534 (1,147) 17,304	2006 HK$’000 (13,789) 483,620 41,856 8,960 28,403 172,081 11,432 58 (6,295) 1,000 2,752 43,894 4,044 1,499 62,147
		841,662
		2006 HK$’000 13,230 794 (635)
		13,389

9. EMPLOYMENT COSTS (INCLUDING DIRECTORS’ EMOLUMENTS)

Salaries, wages and allowances Discretionary bonus Pension costs — defined contribution plans (i) Provision for long service payments Share-based payments Other welfare and benefits	2007 HK$’000 196,571 8,973 10,570 — 161 7,542 223,817	2006 HK$’000 148,782 5,712 9,020 135 693 7,739
		172,081

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FINANCIAL INFORMATION OF THE GROUP

Note:

• (i) The Group has arranged for its Hong Kong employees to join the Hong Kong Mandatory Provident Fund Scheme (the ‘‘MPF Scheme’’), which is a defined contribution scheme managed by independent trustees. Under the MPF scheme, each of the Group (the employer) and its employees make monthly contributions to the scheme at 5% of the employees’ earnings as defined under the Hong Kong Mandatory Provident Fund legislation. The monthly contributions of each of the employer and the employee are subject to a cap of HK$1,000 and thereafter contributions are voluntary.

As stipulated by rules and regulations in Mainland China, group companies operating in Mainland China contribute to state-sponsored retirement plans for their employees. The employees contribute approximately 5% to 8% of their basic salaries, while the group companies contribute approximately 8% to 20% of the basic salaries of their employees and have no further obligations for the actual payment of pensions or post-retirement benefits beyond the annual contributions. The state-sponsored retirement plans are responsible for the entire pension obligations payable to retired employees.

As stipulated by rules and regulations in Singapore, the group company operating in Singapore contributes to the Singapore Central Provident Fund, a statutory pension scheme. The group company and its employees contribute 20% and 13% of the basic salaries of the employees, respectively. The employer’s and employees’ contributions are subject to a cap of monthly earnings of SGD4,500 (equivalent to HK$22,000).

10. DIRECTORS’ AND SENIOR EXECUTIVES’ EMOLUMENTS

(a) Directors’ emoluments

The remuneration of each director of the Company for the year ended 31st March, 2007 is set out below:

Name of Director Executive Directors Mr. Lam Kwong Yu Ms. Yeung Chui Mr. Tai Tzu Shi, Angus Mr. Cheung Chi Shing, Charles Non-Executive Director Mr. Christopher James Williams Independent Non-Executive Directors Mr. Chan Yue Kwong, Michael Mr. Kwok Lam-Kwong, Larry, JP Mr. Tam King Ching, Kenny	Fees HK$’000 138 88 88 88 260 260 150 150	Salaries and allowances HK$’000 2,940 2,924 1,104 1,398 — — — —	Discretionary bonuses HK$’000 70 62 45 59 — — — —	Pension costs — defined contribution plans HK$’000 66 51 29 37 — — — —	Share-based payments HK$’000 32 25 11 11 — — — —	Total HK$’000 3,246 3,150 1,277 1,593 260 260 150 150
	1,222	8,366	236	183	79	10,086

– 44 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The remuneration of each director of the Company for the year ended 31st March, 2006 is set out below:

Name of Director Executive Directors Mr. Lam Kwong Yu Ms. Yeung Chui Mr. Tai Tzu Shi, Angus Mr. Cheung Chi Shing, Charles Non-Executive Director Mr. Christopher James Williams Independent Non-Executive Directors Mr. Chan Yue Kwong, Michael Mr. Kwok Lam-Kwong, Larry, JP Mr. Tam King Ching, Kenny	Fees HK$’000 138 88 88 88 260 260 150 150 1,222	Salaries and allowances HK$’000 2,940 2,911 1,056 1,307 — — — — 8,214	Discretionary bonuses HK$’000 325 273 209 289 — — — — 1,096	Pension costs — defined contribution plans HK$’000 61 51 28 35 — — — — 175	Share-based payments HK$’000 — — 143 143 — — — — 286	Total HK$’000 3,464 3,323 1,524 1,862 260 260 150 150
						10,993

The share-based payments represent charges to the income statement of the fair value of the share options under the share option scheme measured at the respective grant dates, regardless of whether the share options are or will be exercised or not.

No director waived any emolument during the year ended 31st March, 2007 (2006: Nil).

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group include four (2006: four) directors whose emoluments are reflected in the analysis presented above. The emoluments paid/payable to the remaining individual were as follows:

Basic salaries and allowances Discretionary bonuses Share-based payment	2007 HK$’000 1,112 45 11 1,168	2006 HK$’000 1,020 184 18
		1,222

(c) During the year ended 31st March, 2007, no emoluments were paid by the Company to any of the directors or the five highest paid individuals as an inducement to join or upon joining the Group or as compensation for loss of office (2006: Nil).

11. INCOME TAX EXPENSE

The Company is exempted from taxation in Bermuda until 2016. The Company’s subsidiaries established in the British Virgin Islands are incorporated under the International Business Companies Acts of the British Virgin Islands and, accordingly, are exempted from British Virgin Islands income taxes.

Hong Kong profits tax has been provided at the rate of 17.5% (2006: 17.5%) on the estimated assessable profit arising in or derived from Hong Kong.

– 45 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Subsidiaries established and operated in Mainland China are subject to Mainland China Enterprise Income Tax at rates ranging from 15% to 33% for the year (2006: 15% to 33%). In accordance with the applicable law and regulations, the Group’s subsidiaries established in Mainland China as wholly foreign owned enterprises or contractual joint ventures are entitled to full exemption from Enterprise Income Tax for the first two years and a 50% reduction in Enterprise Income Tax for the next three years, commencing from the first profitable year or 1st January, 2008, whichever is earlier, after offsetting unexpired tax losses carried forward from previous years.

The subsidiary established in Singapore is subject to Singapore Corporate Income Tax at a rate of 18% (2006: 20%).

The amount of taxation charged to the consolidated income statement represents:

Current income tax expense — Hong Kong profits tax — Mainland China Enterprise Income Tax — Singapore Corporate Income Tax Deferred taxation (Note 24)	2007 HK$’000 5,724 2,949 3,055 11,728 (2,644) 9,084	2006 HK$’000 17,573 3,602 2,850 24,025 (1,541) 22,484

The tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the group companies as follows:

Profit before income tax Tax calculated at domestic tax rate applicable to profits in the respective countries/jurisdictions Income not subject to tax Expenses not deductible for tax Deferred tax assets not recognised Utilisation of previously unrecognised deferred tax assets Additional provision in respect of prior years Tax charge Weighted average domestic applicable tax rates	2007 HK$’000 41,625 6,693 (152) 2,578 675 (710) — 9,084 16.1%	2006 HK$’000 53,612 8,917 (630) 1,567 2,455 (988) 11,163 22,484 16.6%

12. PROFIT ATTRIBUTABLE TO EQUITY HOLDERS

The consolidated profit attributable to equity holders includes a profit of HK$Nil (2006: HK$544,000) dealt with in the financial statements of the Company.

– 46 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

13. EARNINGS PER SHARE

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

Profit attributable to equity holders of the Company (HK$’000) Weighted average number of ordinary shares in issue (’000) Basic earnings per share (HK cents)	2007 32,541 429,476 7.58	2006 31,128
		428,426
		7.27

Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding assuming conversion of all dilutive potential ordinary shares. Shares issuable under the employee share option scheme are the only dilutive potential ordinary shares. A calculation is made in order to determine the number of shares that could have been acquired at fair value (determined as the average daily market share price of the Company’s shares) based on the monetary value of the subscription rights attached to the outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Profit attributable to equity holders of the Company used to determine diluted earnings per share (HK$’000) Weighted average number of ordinary shares in issue (’000) Adjustments for share options (’000) Weighted average number of ordinary shares for diluted earnings per share (’000) Diluted earnings per share (HK cents) DIVIDENDS Interim dividends — HK$0.015 (2006: HK$0.015) per share Proposed final dividends — HK$0.015 (2006: HK$0.015) per share	2007 32,541 429,476 40 429,516 7.58 2007 HK$’000 6,442 6,442 12,884	2006 31,128
		428,426 467
		428,893
		7.26
		2006 HK$’000 6,442 6,442
		12,884

14. DIVIDENDS

A final dividend is proposed in respect of the year ended 31st March, 2007 of HK1.5 cents per share, amounting to a total dividend of approximately HK$6,442,000, to be approved by the Company’s shareholders at the Company’s upcoming Annual General Meeting. This proposed final dividend has not been reflected as a dividend payable in these consolidated financial statements as at 31st March, 2007, but has been reflected as an appropriation of distributable reserves during the year ended 31st March, 2007.

– 47 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

15. LEASEHOLD LAND AND LAND USE RIGHTS

The Group’s interests in leasehold land and land use rights represent prepaid operating lease payments and their net book amounts are analysed as follows:

In Hong Kong held on: Leases of between 10 to 50 years In Mainland China held on: Land use rights of between 10 to 50 years Beginning of the year Amortisation Translation adjustments End of the year	Consolidated 2007 2006 HK$’000 HK$’000 3,370 3,458 23,455 22,955 26,825 26,413 2007 2006 HK$’000 HK$’000 26,413 28,623 (487) (2,752) 899 542 26,825 26,413	Consolidated 2007 2006 HK$’000 HK$’000 3,370 3,458 23,455 22,955 26,825 26,413 2007 2006 HK$’000 HK$’000 26,413 28,623 (487) (2,752) 899 542 26,825 26,413
		26,413
		2006 HK$’000 28,623 (2,752) 542
		26,413

Amortisation expense recognised in the consolidated income statement is analysed as follows:

Cost of sales General and administrative expenses	2007 HK$’000 88 399 487	2006 HK$’000 88 2,664
		2,752

At 31st March, 2007, leasehold land with a net book amount of approximately HK$2,110,000 (2006: HK$2,166,000) was mortgaged as collateral for the Group’s banking facilities (Note 31).

– 48 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

16. PROPERTY, PLANT AND EQUIPMENT

At 1st April, 2005 Cost Accumulated depreciation Net book amount Year ended 31st March, 2006 Opening net book amount Additions Depreciation Disposals Translation adjustments Closing net book amount At 31st March, 2006 Cost Accumulated depreciation Net book amount Year ended 31st March, 2007 Opening net book amount Additions Depreciation Disposals Transfers Translation adjustments Closing net book amount At 31st March, 2007 Cost Accumulated depreciation Net book amount	Buildings HK$’000 84,640 (12,676) 71,964 71,964 32,540 (3,237) — 981 102,248 118,271 (16,023) 102,248 102,248 7,884 (4,051) — 28,155 3,389 137,625 158,030 (20,405) 137,625	Plant and machinery HK$’000 465,491 (237,992) 227,499 227,499 50,699 (39,023) (23) 2,721 241,873 519,471 (277,598) 241,873 241,873 38,164 (46,856) (1) 47,172 7,537 287,889 617,206 (329,317) 287,889	Consolidated Furniture and equipment Motor vehicles HK$’000 HK$’000 35,665 11,785 (27,037) (8,220) 8,628 3,565 8,628 3,565 13,191 1,170 (4,444) (1,234) (7) (8) 144 30 17,512 3,523 49,063 12,939 (31,551) (9,416) 17,512 3,523 17,512 3,523 2,167 1,644 (5,138) (1,415) (2) (168) — — 469 149 15,008 3,733 52,024 14,115 (37,016) (10,382) 15,008 3,733	Construction in progress HK$’000 22,073 — 22,073 22,073 30,701 — — 974 53,748 53,748 — 53,748 53,748 24,130 — — (75,327) 1,211 3,762 3,762 — 3,762	Total HK$’000 619,654 (285,925)
					333,729
					333,729 128,301 (47,938) (38) 4,850
					418,904
					753,492 (334,588)
					418,904
					418,904 73,989 (57,460) (171) — 12,755
					448,017
					845,137 (397,120)
					448,017

(a) Depreciation expense recognised in the consolidated income statement is analysed as follows:

Cost of sales Selling and distribution costs General and administrative expenses	2007 HK$’000 52,442 392 4,626 57,460	2006 HK$’000 44,577 317 3,044
		47,938

– 49 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

• (b) Construction in progress mainly represents factories and office buildings and plant and machinery under construction in Mainland China.

• (c) At 31st March, 2007, buildings with a net book value of approximately HK$2,554,000 (2006: HK$2,094,000) were mortgaged as collateral for the Group’s banking facilities (Note 31).

• (d) Finance leases

Certain machineries above are held under finance leases. Details of these assets are:

Cost Less: Accumulated depreciation Net book value Depreciation for the year	Consolidated 2007 2006 HK$’000 HK$’000 26,119 39,496 (9,140) (11,813) 16,979 27,683 2,580 4,044

1. INVESTMENTS IN AND AMOUNTS DUE FROM SUBSIDIARIES — COMPANY

Investment in unlisted shares, at cost Amounts due from subsidiaries Less: Accumulated impairment losses	2007 HK$’000 91,449 165,696 257,145 (12,622) 244,523	2006 HK$’000 91,449 166,107 257,556 (12,622) 244,934

Amounts due from subsidiaries represent equity funding by the Company to the respective subsidiaries and are measured in accordance with the Company’s accounting policy for investment in subsidiaries.

– 50 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Particulars of the principal subsidiaries as at 31st March, 2007 were:

	Place of	Issued and fully	Percentage of	Percentage of
	incorporation and	paid share	equity interest held
Name of company	operations	capital	Directly	Indirectly	Principal activities
Starlite International	British Virgin	US$2	100%	—	Investment holding
(Holdings) Ltd.	Islands
Starlite Printers Holdings	Cook Islands	US$200	100%	—	Investment holding
Cook Islands Limited
Starlite Printers (Far East)	Singapore	S$8,759,396	100%	—	Printing of packaging
Pte. Ltd.					materials and production
					of paper products
Everfar Holdings Limited	British Virgin	US$20,000	50%	50%	Investment holding
	Islands
Starlite Visual	Hong Kong	HK$2,000,000	—	100%	Production and distribution
Communication Limited					of licensed products
Star Union Limited	Hong Kong/	HK$2	—	100%	Property holding
	Mainland China
Starlite Consumer	British Virgin	US$1	—	100%	Investment holding
Products, Limited	Islands
Starlite Entertainment	British Virgin	US$1	—	100%	Investment holding
(Holdings) Limited	Islands
Starlite International	British Virgin	US$1	—	100%	Procurement agency
Development Limited	Islands/
	Hong Kong
Starlite International	British Virgin	US$1	—	100%	Procurement agency
Marketing Services	Islands/
Limited	Hong Kong
Starlite Laser Graphics	Hong Kong	HK$3,230,000	—	100%	Provision of design and
Limited		ordinary			colour separation
					services
		HK$170,000	—	—
		non-voting
		deferred (ii)
Starlite Management	Hong Kong	HK$200	—	100%	Provision of management
Services Limited					services
Starlite Packaging	British Virgin	US$1	—	100%	Holding of trade and service
Technology Consultancy	Islands				marks
Limited
Starlite Development	Hong Kong	HK$200	—	100%	Trading of paper products
(China) Limited

– 51 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

	Place of	Issued and fully	Percentage of	Percentage of
	incorporation and	paid share	equity interest held
Name of company	operations	capital	Directly	Indirectly	Principal activities
Starlite Paper Products	Hong Kong/	HK$1,738,000	—	100%	Production of paper
Limited	Mainland China	ordinary			products
		HK$262,000	—	—
		non-voting
		deferred (ii)
Starlite Printers Limited	Hong Kong	HK$2,700,000	—	100%	Printing and trading of
		ordinary			packaging materials
		HK$2,300,000	—	—
		non-voting
		deferred (ii)
Starlite Printers HK	British Virgin	US$1	—	100%	Investment holding
Holdings (BVI) Limited	Islands
Starlite Printers (China)	British Virgin	US$100	—	100%	Investment holding
Limited	Islands
Starlite Printers (Shenzhen)	Mainland China	US$8,000,000	—	100%	Printing of packaging
Co., Ltd. (i)					materials and production
					of paper products
Starlite Printers (Suzhou)	Mainland China	US$17,044,489	—	100%	Printing of packaging
Co., Ltd. (i)					materials and production
					of paper products
Starlite Productions (BVI)	British Virgin	US$256,420	—	100%	Investment holding
Limited	Island
Starlite Productions	British Virgin	US$1	—	100%	Investment holding
(Holdings) Limited	Islands
Guangzhou Starlite	Mainland China	US$6,000,000	—	100%	Production of
Environmental Friendly					environmentally friendly
Center, Limited (i)					and other paper products
Greenworks International	Hong Kong	HK$2	—	100%	Investment holding and
Limited					trading of
					environmentally friendly
					and other paper products
Shaoguan Fortune Creative	Mainland China	US$6,000,000	—	100%	Printing of packaging
Industries Company					materials and production
Limited (i)					of paper products

– 52 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Notes:

• (i) All subsidiaries incorporated in Mainland China, except for Guangzhou Starlite Environmental Friendly Center, Limited and Shenzhen Xiangguangmei Gifts Co., Ltd., are wholly foreign owned companies to be operated for 50 years up to 2042 to 2053. Guangzhou Starlite Environmental Friendly Center, Limited is a contractual joint venture established in Mainland China to be operated for 50 years up to 2044. Under the joint venture agreement, the joint venture partner is entitled to a pre-determined fee and is not entitled to share any profit or required to bear any loss of the joint venture. Shenzhen Xiangguangmei Gifts Co., Ltd. is an equity joint venture established in Mainland China to be operated for 20 years up to 2017.

• (ii) The non-voting deferred shares are not owned by the Group. These shares have no voting rights, are not entitled to dividends unless the net profit of the relevant company exceeds HK$50,000,000,000 and are not entitled to any distributions upon winding up unless a sum of HK$50,000,000,000 has been distributed by the relevant company to the holders of its ordinary shares.

None of the subsidiaries had any loan capital in issue at any time during the year ended 31st March, 2007.

18. INVENTORIES

Raw materials Work-in-progress Finished goods	Consolidated 2007 2006 HK$’000 HK$’000 59,671 38,176 22,110 29,975 23,493 16,985 105,274 85,136	Consolidated 2007 2006 HK$’000 HK$’000 59,671 38,176 22,110 29,975 23,493 16,985 105,274 85,136
		85,136

The cost of inventories recognised as expense and included in cost of sales amounted to HK$879,034,000 (2006: HK$699,549,000).

During the ended 31st March, 2007, the Group recorded a write-down of inventories of HK$2,344,000 (2006: HK$1,000,000), which was included in cost of sales.

The carrying amount of inventories that were pledged as security for trust receipts bank loan arrangements amounted to approximately HK$49,391,000 as at 31st March, 2007 (2006: HK$13,234,000) (Note 31).

– 53 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

19. TRADE AND BILLS RECEIVABLE

The Group grants to its customers credit terms generally ranging from 30 to 120 days.

The aging analysis of trade and bills receivable is as follows:

1 to 90 days 91 to 180 days 181 to 365 days Over 365 days Less: Provision for impairment of receivables	Consolidated 2007 2006 HK$’000 HK$’000 168,780 152,485 22,759 22,185 22,583 5,694 4,022 277 218,144 180,641 (23,127) (3,888) 195,017 176,753	Consolidated 2007 2006 HK$’000 HK$’000 168,780 152,485 22,759 22,185 22,583 5,694 4,022 277 218,144 180,641 (23,127) (3,888) 195,017 176,753
		180,641 (3,888)
		176,753

The carrying amounts of trade and bills receivable approximate their fair values.

There is no concentration of credit risk with respect to trade and bills receivable, as the Group has a large number of customers, internationally dispersed.

The Group has recognised a provision of HK$19,280,000 (2006: reversal of HK$6,295,000) for the impairment of its trade and bills receivable, which has been included in general and administrative expenses in the consolidated income statement.

The Group’s trade and bills receivable were denominated in the following currencies:

Hong Kong Dollars United States Dollars Chinese Renminbi Singapore Dollars Others	Consolidated 2007 2006 HK$’000 HK$’000 59,043 45,528 113,705 84,373 31,517 37,064 12,979 13,623 900 53 218,144 180,641	Consolidated 2007 2006 HK$’000 HK$’000 59,043 45,528 113,705 84,373 31,517 37,064 12,979 13,623 900 53 218,144 180,641
		180,641

– 54 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

20. CASH AND CASH EQUIVALENTS

Cash at bank and on hand Short-term bank deposits	Consolidated 2007 2006 HK$’000 HK$’000 89,627 76,958 17,416 12,854 107,043 89,812	Company 2007 2006 HK$’000 HK$’000 280 71 — — 280 71	Company 2007 2006 HK$’000 HK$’000 280 71 — — 280 71
			71

As at 31st March, 2007 the effective interest rate on cash at bank, short-term bank deposits ranged from 1.95% to 3.63% (2006: 1.85% to 2.91%). These short-term bank deposits have an average maturity of two months (2006: two months).

Cash and cash equivalents were denominated in the following currencies:

Hong Kong Dollars Chinese Renminbi United States Dollars Euro Singapore Dollars Others	Consolidated 2007 2006 HK$’000 HK$’000 24,293 20,268 15,365 12,941 42,207 15,786 1,745 26,948 23,086 13,574 347 295 107,043 89,812	Company 2007 2006 HK$’000 HK$’000 280 71 — — — — — — — — — — 280 71	Company 2007 2006 HK$’000 HK$’000 280 71 — — — — — — — — — — 280 71
			71

The Group’s cash and cash equivalents denominated in RMB are deposited with banks in Mainland China. The conversion of these Chinese Renminbi denominated balances into foreign currencies and the remittance of funds out of Mainland China is subject to the foreign exchange control rules and regulations promulgated by the Mainland China Government.

– 55 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Cash and bank overdrafts include the following for purposes of the cash flow statements:

Cash and cash equivalents Bank overdrafts	2007 HK$’000 107,043 (254) 106,789	2006 HK$’000 89,812 (505) 89,307

21. BORROWINGS

Non-current Long-term bank loans Current Current portion of long-term bank loans Short-term bank loans Trust receipts import bank loans Bank overdrafts	Consolidated 2007 2006 HK$’000 HK$’000 106,974 135,135 54,277 59,100 68,607 46,824 49,391 13,234 254 505 172,529 119,663 ~~- - - - - - - - - -~~ ~~- - - - - - - - - -~~ 279,503 254,798	Consolidated 2007 2006 HK$’000 HK$’000 106,974 135,135 54,277 59,100 68,607 46,824 49,391 13,234 254 505 172,529 119,663 ~~- - - - - - - - - -~~ ~~- - - - - - - - - -~~ 279,503 254,798
		59,100 46,824 13,234 505
		119,663 ~~- - - - - - - - - -~~
		254,798

The carrying amounts of all bank borrowings approximate their fair value.

The maturity of borrowings is as follows:

Within 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years	Consolidated 2007 2006 HK$’000 HK$’000 172,529 119,663 54,279 59,100 52,494 76,035 201 — 279,503 254,798

– 56 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The carrying amounts of bank borrowings are denominated in the following currencies:

Hong Kong Dollars Chinese Renminbi United States Dollars Euro Singapore Dollars	Consolidated 2007 2006 HK$’000 HK$’000 227,776 217,387 45,914 33,810 5,687 3,228 126 — — 373 279,503 254,798	Consolidated 2007 2006 HK$’000 HK$’000 227,776 217,387 45,914 33,810 5,687 3,228 126 — — 373 279,503 254,798
		254,798

The effective interest rates (per annum) at the balance sheet date were as follows:

			2007					2006
	HK$	RMB	US$	S$	Euro	HK$	RMB	US$	S$	Euro
Bank overdrafts	7.75%	—	—	—	—	6.75%	—	—	7.25%	—
Trust receipts import
bank loans	6.88%	—	7.60%	—	7.75%	6.16%	—	6.18%	—	—
Finance leases	5.81%	—	—	5.83%	—	3.39%	—	—	5.83%	—
Short-term bank loans	5.87%	5.86%	—	—	—	5.41%	5.70%	—	—	—
Long-term bank loans	5.66%	—	—	—	—	5.24%	—	—	—	—

22. FINANCE LEASE OBLIGATIONS

Total minimum lease payments under finance leases — not exceeding one year — more than one year and not exceeding two years — more than two years and not exceeding five years Less: Future finance charges Analysed as: The present value of obligations under finance leases — not exceeding one year — more than one year and not exceeding two years — more than two years and not exceeding five years Less: Amounts payable within one year included under current liabilities	Consolidated 2007 2006 HK$’000 HK$’000 2,782 8,174 2,226 2,631 742 2,767 5,750 13,572 (327) (825) 5,423 12,747 2,565 7,655 2,124 2,428 734 2,664 5,423 12,747 (2,565) (7,655) 2,858 5,092	Consolidated 2007 2006 HK$’000 HK$’000 2,782 8,174 2,226 2,631 742 2,767 5,750 13,572 (327) (825) 5,423 12,747 2,565 7,655 2,124 2,428 734 2,664 5,423 12,747 (2,565) (7,655) 2,858 5,092
		13,572 (825)
		12,747
		7,655 2,428 2,664
		12,747 (7,655)
		5,092

– 57 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

23. TRADE AND BILLS PAYABLE

The aging analysis of trade and bills payable is as follows:

1 to 90 days 91 to 180 days 181 to 365 days Over 365 days	Consolidated 2007 2006 HK$’000 HK$’000 124,209 116,196 20,740 14,288 8,038 3,592 1,224 418 154,211 134,494	Consolidated 2007 2006 HK$’000 HK$’000 124,209 116,196 20,740 14,288 8,038 3,592 1,224 418 154,211 134,494
		134,494

The Group’s trade and bills payable were denominated in the following currencies:

Hong Kong Dollars Chinese Renminbi United States Dollars Others	Consolidated 2007 2006 HK$’000 HK$’000 68,621 60,289 63,441 36,220 10,357 15,516 11,792 22,469 154,211 134,494	Consolidated 2007 2006 HK$’000 HK$’000 68,621 60,289 63,441 36,220 10,357 15,516 11,792 22,469 154,211 134,494
		134,494

24. DEFERRED INCOME TAX

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against tax liabilities and when the deferred taxes relate to the same fiscal authority. The net amounts are as follows:

Deferred tax liabilities to be settled after 12 months	Consolidated 2007 2006 HK$’000 HK$’000 13,303 15,794

The movements in the deferred tax account are as follows:

Beginning of the year Deferred taxation credited to income statement (Note 11) Translation adjustments End of the year	Consolidated 2007 2006 HK$’000 HK$’000 15,794 17,301 (2,644) (1,541 153 34 13,303 15,794	Consolidated 2007 2006 HK$’000 HK$’000 15,794 17,301 (2,644) (1,541 153 34 13,303 15,794
		15,794

– 58 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The movement in deferred tax assets and liabilities without taking into consideration the offsetting of balances within the same tax jurisdiction is as follows:

Deferred tax assets:

Beginning of the year Credited/(Charged) to income statement Translation adjustments End of the year	Tax losses 2007 2006 HK$’000 HK$’000 258 — (258) 258 — — — 258	Others 2007 2006 HK$’000 HK$’000 458 1,856 5 (1,396) — (2) 463 458	Total 2007 2006 HK$’000 HK$’000 716 1,856 (253) (1,138) — (2) 463 716	Total 2007 2006 HK$’000 HK$’000 716 1,856 (253) (1,138) — (2) 463 716
				716

Deferred tax liabilities:

Beginning of the year Credited to income statement Translation adjustments End of the year	Accelerated taxation depreciation 2007 2006 HK$’000 HK$’000 16,510 19,157 (2,897) (2,679) 153 32 13,766 16,510	Accelerated taxation depreciation 2007 2006 HK$’000 HK$’000 16,510 19,157 (2,897) (2,679) 153 32 13,766 16,510
		16,510

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future profits is probable. The Group has not recognised deferred tax assets of approximately HK$29,837,000 (2006: HK$27,477,000), in respect of the tax effect of cumulative tax losses (subject to agreement by the relevant tax authorities) amounting to HK$29,273,000 (2006: HK$24,553,000) that can be carried forward against future taxable income. As at 31st March, 2007, tax losses amounting to approximately HK$6,927,000 (2006: HK$5,991,000) will expire in 2012, while the remaining balance can be carried forward indefinitely.

25. SHARE CAPITAL

Authorised — Ordinary shares of HK$0.1 each Issued and fully paid — Ordinary shares of HK$0.1 each: Beginning of the year Issue of shares upon exercise of share options End of the year	2007 Number of shares Nominal value ’000 HK$’000 1,000,000 100,000 429,476 42,947 — — 429,476 42,947	2006 Number of shares Nominal value ’000 HK$’000 1,000,000 100,000 425,175 42,517 4,301 430 429,476 42,947	2006 Number of shares Nominal value ’000 HK$’000 1,000,000 100,000 425,175 42,517 4,301 430 429,476 42,947
			42,517 430
			42,947

– 59 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

26. EMPLOYEE SHARE OPTIONS

In 2002, the Company adopted a new employee share options scheme (the ‘‘New Share Options Scheme’’) to replace the old employee share options scheme adopted in 1993 (the ‘‘Old Share Options Scheme’’). Under the New Share Options Scheme, the Company may grant options to employees (including executive directors of the Company) to subscribe for shares in the Company, subject to a maximum of 30% of the nominal value of the issued share capital of the Company from time to time excluding for this purpose any shares issued on the exercise of options. The exercise price will be determined by the Company’s board of directors and shall be at least the highest of (i) the closing price of the Company’s shares on the date of grant of the options, (ii) an average closing price of the Company’s shares for the five trading days immediately preceding the date of grant of the options, and (iii) the nominal value of the Company’s shares of HK$0.1 each. The Group has no legal or constructive obligation to repurchase or settle the options in cash. All options granted under the Old Share Options Scheme will continue to be valid and exercisable in accordance with the rules of the Old Share Options Scheme.

Movements of employee share options during the year ended 31st March, 2007 were:

Date of grant Exercise period Subscription price per share Old Share Options Scheme 10th September, 1997 11th March, 1998 to 9th September, 2007 HK$0.69 New Share Options Scheme 6th February, 2004 6th August, 2004 to 5th February, 2007 HK$0.93 19th February, 2004 19th August, 2004 to 18th February, 2007 HK$1.07 29th December, 2004 29th June, 2005 to 28th December, 2007 HK$0.77 28th October, 2005 28th April, 2006 to 27th October, 2007 HK$0.72 9th February, 2007 9th August, 2007 to 8th February, 2010 HK$0.48	Beginning of year ’000 3,514 3,363 6,900 5,616 482 — 19,875	Number of shares Granted during the year Exercised during the year Lapsed during the year ’000 ’000 ’000 — — — — — (3,363) — — (6,900) — — (764) — — (64) 7,585 — — 7,585 — (11,091)	End of year ’000 3,514 — — 4,852 418 7,585
			16,369

The weighted average fair value of options granted on 9th February, 2007 determined using the binomial valuation model was HK$0.075 per option. The significant inputs into the model were share price of HK$0.48 at the grant date, the exercise price of HK$0.48, volatility of 32.59%, dividend yield of 6.32% per annum, an expected option life of 2.6 years, and annual risk-free interest rate of 4.17%. The volatility measured at the standard deviation of continuously compounded share returns is based on statistical analysis of daily share prices of listed companies in a similar business over the last three years.

Based on the above, the fair value of the above options granted during the year was approximately HK$571,000 (2006: HK$1,324,000). The attributable amount charged to the consolidated income statement during the year ended 31st March, 2007 was approximately HK$161,000 (2006: HK$693,000).

– 60 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

27. RESERVES

Movements were:

Consolidated Balance at 31st March, 2005 Fair value gains — Other non-current assets Currency translation differences Net income recognised directly in equity Profit attributable to equity holders of the Company Total recognised income for the year Dividends paid Employee share options scheme — Value of employee services — Issue of shares upon exercise of employee share options Balance at 31st March, 2006 Fair value gains — Other non-current assets Currency translation differences Net income recognised directly in equity Profit attributable to equity holders of the Company Total recognised income for the year Dividends paid Employee share options scheme — Value of employee services Balance at 31st March, 2007	Share premium HK$’000 100,968 - - - - - - - — — — — — ~~- - - - - - -~~ 100,968 — — 3,189 104,157 - - - - - - - — — — — — - - - - - - - 104,157 — — 104,157	Capital reserve HK$’000 1,169 - - - - - - - — — — — — ~~- - - - - - -~~ 1,169 — — — 1,169 - - - - - - - — — — — — - - - - - - - 1,169 — — 1,169	Share-based compensation reserve HK$’000 631 - - - - - - - - - - — — — — — ~~- - - - - - - - - -~~ 631 — 693 (349) 975 - - - - - - - - - - — — — — — - - - - - - - - - - 975 — 161 1,136	Investment reserve HK$’000 232 - - - - - - - - 127 — 127 — 127 ~~- - - - - - - -~~ 359 — — — 359 - - - - - - - - 363 — 363 — 363 - - - - - - - - 722 — — 722	Translation reserve HK$’000 (3,511) - - - - - - - - - — 1,697 1,697 — 1,697 ~~- - - - - - - - -~~ (1,814) — — — (1,814) - - - - - - - - - — 9,476 9,476 — 9,476 - - - - - - - - - 7,662 — — 7,662	Retained profits HK$’000 183,641 - - - - - - - - — — — 31,128 31,128 ~~- - - - - - - -~~ 214,769 (17,141) — — 197,628 - - - - - - - - — — — 32,541 32,541 - - - - - - - - 230,169 (12,884) — 217,285	Total HK$’000 283,130 - - - - - - - - 127 1,697
							1,824 31,128
							32,952 ~~- - - - - - - -~~
							316,082 (17,141) 693 2,840
							302,474 - - - - - - - - 363 9,476
							9,839 32,541
							42,380 - - - - - - - -
							344,854 (12,884) 161
							332,131

– 61 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Company Balance at 31st March, 2005 Profit for the year Employee share options scheme — Value of employee services — Issue of shares upon exercise of employee share options Dividends paid Balance at 31st March, 2006 Profit for the year Employee share option scheme — Value of employee services Dividends paid Balance at 31st March, 2007	Share premium HK$’000 100,968 — — 3,189 — 104,157 — — — 104,157	Capital reserve HK$’000 520 — — — — 520 — — — 520	Share-based compensation reserve HK$’000 631 — 693 (349) — 975 — 161 — 1,136	Investment reserve HK$’000 — — — — — — — — — —	Translation reserve HK$’000 — — — — — — — — — —	Retained profits HK$’000 39,469 544 — — (17,141) 22,872 — — (12,884) 9,988	Total HK$’000 141,588 544 693 2,840 (17,141) 128,524 — 161 (12,884) 115,801

28. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

(a) Reconciliation of profit before income tax to cash generated from operations:

Profit before income tax Adjustments for: — Interest income — Interest expense — Depreciation of property, plant and equipment — Amortisation of leasehold land and land use rights — Net loss/(gain) on disposal of property, plant and equipment — Share-based payments — Translation adjustments Changes in working capital: — Inventories — Trade and bills receivable — Prepayments and deposits — Trade and bills payable — Accruals and other payables Net cash generated from operations	2007 HK$’000 41,625 (1,147) 18,451 57,460 487 21 161 153 117,211 (20,138) (18,264) 12,427 19,717 7,267 118,220	2006 HK$’000 53,612 (635) 14,024 47,938 2,752 (277) 693 34 118,141 (12,439) (35,089) (2,405) 12,354 369 80,931

– 62 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

• (b) In the cash flow statement, proceeds from disposal of property, plant and equipment comprise:

Net book amount (Loss)/Gain on disposal of property, plant and equipment Proceeds from disposal of property, plant and equipment	2007 HK$’000 171 (21) 150	2006 HK$’000 38 277
		315

29. COMMITMENTS

(a) Capital commitments

Capital expenditure at the balance sheet date contracted but not yet provided for is as follows:

Land Machinery Furniture and equipment	Consolidated 2007 2006 HK$’000 HK$’000 582 — 31,846 14,576 80 1,507 32,508 16,083	Consolidated 2007 2006 HK$’000 HK$’000 582 — 31,846 14,576 80 1,507 32,508 16,083
		16,083

(b) Operating lease commitments

The Group had future aggregate minimum lease payments under non-cancellable operating leases of land and buildings, as follows:

Amounts payable — within one year — later than one year but no later than and five years — later than five years	Consolidated 2007 2006 HK$’000 HK$’000 12,021 10,763 18,267 16,390 3,738 5,751 34,026 32,904	Consolidated 2007 2006 HK$’000 HK$’000 12,021 10,763 18,267 16,390 3,738 5,751 34,026 32,904
		32,904

(c) Other commitments

Total pre-determined fees payable to the joint venture partner of Guangzhou Starlite Environmental Friendly Center, Limited for 50 years up to 2044 amounted to approximately HK$18,226,000 (2006: HK$18,368,000) (Note 17).

30. FINANCIAL GUARANTEES

As at 31st March, 2007, the Company had provided guarantees in respect of banking facilities of its subsidiaries amounting to approximately HK$692,592,000 (2006: HK$665,488,000). The facilities utilised by the subsidiaries as at 31st March, 2007 amounted to HK$309,734,000 (2006: HK$300,871,000).

– 63 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

31. BANKING FACILITIES AND PLEDGE OF ASSETS

As at 31st March, 2007, the Group had aggregate banking facilities of approximately HK$639,558,000 (2006: HK$636,996,000) for overdrafts, loans, trade financing and bank guarantees. Unused facilities as at the same date amounted to approximately HK$302,050,000 (2006: HK$316,731,000). These facilities were secured by:

• (i) mortgages over the Group’s leasehold land and buildings with a net book value of approximately HK$4,664,000 (2006: HK$4,260,000) (Note 15 and Note 16 (c));

• (ii) the Group’s inventories held under trust receipts bank loan arrangements of approximately HK$49,391,000 (2006: HK$13,234,000) (Note 18); and

• (iii) guarantees provided by the Company and certain of its subsidiaries.

32. RELATED PARTY TRANSACTIONS

As at 31st March, 2007, approximately 51.47% of the Company’s ordinary shares were owned by Best Grade Advisory Limited, a company incorporated in the British Virgin Islands. Best Grade Advisory Limited is owned by two discretionary trusts, the discretionary beneficiaries of which include Mr. Lam Kwong Yu and Ms. Yeung Chui, directors of the Company. The directors of the Company regard Best Grade Advisory Limited to be the ultimate holding company.

• (a) Particulars of significant transactions between the Group and a related party are summarised as follows:

Operating lease rentals charged by related parties: Megastar Enterprises Limited1	Consolidated 2007 2006 HK$’000 HK$’000 58 58

• 1 Megastar Enterprises Limited is beneficially owned by Ms. Yeung Chui, a director of the Company.

In the opinion of the Company’s directors and the Group’s management, the above transactions were carried out in the usual course of business and on normal commercial terms, and in accordance with the terms of the contract entered into by the Group and the related party.

(b) Key management compensation

Basic salaries and allowances Discretionary bonus Pension costs — defined contribution plans Share-based payments	Consolidated 2007 2006 HK$’000 HK$’000 9,880 9,636 281 1,280 183 175 90 304 10,434 11,395	Consolidated 2007 2006 HK$’000 HK$’000 9,880 9,636 281 1,280 183 175 90 304 10,434 11,395
		11,395

– 64 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

33. EVENT AFTER THE BALANCE SHEET DATE

In April 2007, a wholly-owned subsidiary of the Company entered into an agreement to acquire a 75% equity interest in Taspack Industrial Sdn. Bha., a private company incorporated in Malaysia, from certain third parties for a consideration of approximately RM9,444,000 (equivalent to HK$19,836,000).

– 65 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

III. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007

The following information has been extracted from the published interim report of the Company for the six months ended 30 September 2007.

Condensed consolidated income statement

For the six months ended 30th September, 2007

Notes Revenue 4 Cost of sales Gross profit Other gains — net 5 Selling and distribution costs General and administrative expenses Operating profit 6 Finance costs — net 7 Profit before income tax Income tax expense 8 Profit for the period, attributable to equity holders of the Company Earnings per share for profit attributable to equity holders of the Company during the period (expressed in HK cents per share) 9 — Basic — Diluted Dividends 10

Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 625,977 634,547 (489,081) (494,938) 136,896 139,609 723 426 (30,420) (32,306) (62,583) (62,392) 44,616 45,337 (8,042) (8,615) 36,574 36,722 (7,039) (8,527) 29,535 28,195 6.88 6.56 6.87 6.56 6,442 6,442

The accompanying notes are an integral part of these condensed financial information.

– 66 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Condensed consolidated balance sheet

As at 30th September, 2007

Note ASSETS Non-current assets Property, plant and equipment 11 Leasehold land and land use rights 11 Other non-current assets Current assets Inventories Trade and bills receivable 12 Prepayments and deposits Cash and cash equivalents LIABILITIES Current liabilities Borrowings 13 Finance lease obligations, current portion Trade and bills payable 14 Accruals and other payables Current income tax liabilities Net current assets Total assets less current liabilities	Unaudited As at 30th September, 2007 HK$’000 466,158 27,025 1,275 494,458 - - - - - - - - - - 99,248 296,898 14,182 127,638 537,966 - - - - - - - - - - 179,306 2,100 224,571 62,412 27,346 495,735 - - - - - - - - - - 42,231 - - - - - - - - - - 536,689 - - - - - - - - - -	Audited As at 31st March, 2007 HK$’000 448,017 26,825 1,543
		476,385 - - - - - - - - - - 105,274 195,017 15,094 107,043
		422,428 - - - - - - - - - - 172,529 2,565 154,211 49,260 22,035
		400,600 - - - - - - - - - -
		21,828 - - - - - - - - - -
		498,213 - - - - - - - - - -

– 67 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note Non-current liabilities Borrowings 13 Finance lease obligations, non-current portion Deferred income tax liabilities 15 Net assets EQUITY Capital and reserves attributable to equity holders of the Company Share capital 16 Reserves 17 Shareholders’ equity	Unaudited As at 30th September, 2007 HK$’000 117,231 1,839 13,332 132,402 - - - - - - - - - - 404,287 42,947 361,340 404,287	Audited As at 31st March, 2007 HK$’000 106,974 2,858 13,303
		123,135 - - - - - - - - - -
		375,078
		42,947 332,131
		375,078

The accompanying notes are an integral part of these condensed financial information.

– 68 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Condensed consolidated statement of changes in equity For the six months ended 30th September, 2007

Balance at 1st April, 2007 Fair value gains Currency translation differences Net income recognised directly in equity Profit for the period Total recognised income for the period Dividends paid Employee share options scheme — Value of employee services Balance at 30th September, 2007 Balance at 1st April, 2006 Fair value gains Currency translation differences Net income recognised directly in equity Profit for the period Total recognised income for the period Dividends paid Balance at 30th September, 2006

Unaudited Attributable to equity holders of the Company Share capital Reserves Total HK$’000 HK$’000 HK$’000 42,947 332,131 375,078 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - — (184) (184) — 5,891 5,891 — 5,707 5,707 — 29,535 29,535 — 35,242 35,242 — (6,442) (6,442) — 409 409 — 29,209 29,209 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 42,947 361,340 404,287 42,947 302,474 345,421 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - — 93 93 — 2,280 2,280 — 2,373 2,373 — 28,195 28,195 — 30,568 30,568 — (6,442) (6,442) — 24,126 24,126 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 42,947 326,600 369,547

The accompanying notes are an integral part of these condensed financial information.

– 69 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Condensed consolidated cash flow statement

For the six months ended 30th September, 2007

Net cash generated from/(used in) operating activities Net cash used in investing activities Net cash provided by financing activities Currency translation differences Net increase in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Analysis of the balances of cash and cash equivalents: Bank balances and cash Bank overdraft	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 40,404 (5,363) (26,824) (34,575) 2,555 53,089 (684) — 15,451 13,151 106,789 89,307 122,240 102,458 127,638 105,453 (5,398) (2,995) 122,240 102,458

The accompanying notes are an integral part of these condensed financial information.

– 70 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Notes to the condensed consolidated financial information

1. GENERAL INFORMATION

Starlite Holdings Limited (‘‘the Company’’) and its subsidiaries (together the ‘‘Group’’) are principally engaged in the printing and manufacturing of packaging materials, labels, paper products and environmentally friendly products.

The Company is a limited liability company incorporated in Bermuda. The address of its registered office is Canon’s Court, 22 Victoria Street, Hamilton, HM12, Bermuda.

The Company’s shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited.

This condensed consolidated interim financial information are presented in Hong Kong dollars (HK$) unless otherwise stated. This condensed consolidated interim financial information was approved for issue on 5th December, 2007.

2. BASIS OF PREPARATION

This condensed consolidated interim financial information for the six months ended 30th September, 2007 has been prepared in accordance with Hong Kong Accounting Standard (‘‘HKAS’’) 34 ‘‘Interim Financial Reporting’’. The condensed consolidated interim financial information should be read in conjunction with the Group’s annual financial statements for the year ended 31st March, 2007.

3. ACCOUNTING POLICIES

The accounting policies adopted are consistent with those of and as described in the annual financial statements for the year ended 31st March, 2007.

The following new standards, amendments to standards and interpretations are mandatory and relevant for financial year ending 31st March, 2008.

HKAS 1 (Amendment) Presentation of Financial Statements: Capital Disclosures HKFRS 7 Financial Instruments: Disclosures HK(IFRIC) — Int 8 Scope of HKFRS 2 HK(IFRIC) — Int 9 Reassessment of Embedded Derivatives HK(IFRIC) — Int 10 Interim Financial Reporting and Impairment HK(IFRIC) — Int 11 HKFRS 2 — Group and Treasury Share Transactions

The adoption of these new standards, amendments to standards and interpretations has no significant impact on the Group interim results and financial position.

The following new standards, amendments to standards and interpretations, which are relevant to the Group, have been issued but are not effective for the year ending 31st March, 2008 and have not been early adopted by the Group:

HKAS 23 (Revised) Borrowing Costs HKFRS 8 Operating Segments HK(IFRIC) — Int 12 Service Concession Arrangements HK(IFRIC) — Int 13 Customer Loyalty Programmes HK(IFRIC) — Int 14 HKAS 19 — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

– 71 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

4. SEGMENT INFORMATION

(a) Revenue is analysed as follows:

Sales of packaging materials, labels, paper products and environmentally friendly products Others	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 619,761 628,558 6,216 5,989 625,977 634,547	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 619,761 628,558 6,216 5,989 625,977 634,547
		634,547

(b) Primary reporting format — business segment

The Group is principally engaged in the printing and manufacturing of packaging materials, labels, paper products and environmentally friendly products. No business segment information is provided as substantially all of the assets, sales and contribution to the Group’s results are attributable to the printing and manufacturing of packaging materials, labels, paper products and environmentally friendly products.

— (c) Secondary reporting segment geographical segments

An analysis of the Group’s results by geographical location is as follows:

Revenue1 Hong Kong and Mainland China United States of America Europe South East Asia Others Profit for the period attributable to equity holders of the Company Hong Kong and Mainland China United States of America Europe South East Asia Others	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 272,512 273,043 163,092 198,268 90,648 74,114 76,090 69,073 23,635 20,049 625,977 634,547 12,510 9,283 7,370 9,449 4,004 3,808 4,564 4,637 1,087 1,018 29,535 28,195	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 272,512 273,043 163,092 198,268 90,648 74,114 76,090 69,073 23,635 20,049 625,977 634,547 12,510 9,283 7,370 9,449 4,004 3,808 4,564 4,637 1,087 1,018 29,535 28,195
		634,547
		9,283 9,449 3,808 4,637 1,018
		28,195

• 1 Revenue by geographical location is determined on the basis of the destination of shipments of merchandise.

There are no material sales between the geographical segments.

– 72 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

An analysis of the Group’s assets by geographical location is as follows:

Hong Kong and Mainland China Singapore	Unaudited As at 30th September, 2007 HK$’000 938,676 93,748 1,032,424	Audited As at 31st March, 2007 HK$’000 813,489 85,324
		898,813

Total assets are allocated based on where the assets are located.

An analysis of the Group’s capital expenditure for the period is as follows:

Hong Kong and Mainland China Singapore	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 40,608 53,154 32 476 40,640 53,630	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 40,608 53,154 32 476 40,640 53,630
		53,630

Capital expenditure is allocated based on where the assets are located.

5. OTHER GAINS — NET

Net exchange gain Net loss on disposal of property, plant and equipment Net gain on disposal of other non-current assets	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 407 439 (2) (13) 318 — 723 426	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 407 439 (2) (13) 318 — 723 426
		426

– 73 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

6. OPERATING PROFIT

The following items have been charged to the operating profit during the period:

Employment costs (including directors’ emoluments) Depreciation of property, plant and equipment and amortisation of leasehold land and land use rights Provision for impairment of receivables	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 121,285 116,821 30,319 28,479 494 5,600

7. FINANCE COSTS — NET

Interest on bank loans wholly repayable within five years Interest element of finance leases Interest income from bank deposits	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 8,437 8,736 124 330 (519) (451) 8,042 8,615	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 8,437 8,736 124 330 (519) (451) 8,042 8,615
		8,615

8. INCOME TAX EXPENSE

Hong Kong profits tax has been provided at the rate of 17.5% (2006: 17.5%) on the estimated assessable profit for the period. Taxation on overseas profits has been calculated on the estimated assessable profit for the period at the rates of taxation prevailing in the countries in which the Group operates.

Current taxation — Hong Kong profits tax — Overseas taxation Deferred taxation	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 5,904 7,321 1,135 1,105 7,039 8,426 — 101 7,039 8,527	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 5,904 7,321 1,135 1,105 7,039 8,426 — 101 7,039 8,527
		8,426 101
		8,527

– 74 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

9. EARNINGS PER SHARE

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

Profit attributable to equity holders of the Company (HK$’000) Weighted average number of ordinary shares in issue (’000) Basic earnings per share (HK cents)	Unaudited Six months ended 30th September, 2007 2006 29,535 28,195 429,476 429,476 6.88 6.56

Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company’s only category of dilutive potential ordinary shares is share options. Calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average daily market share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Profit attributable to equity holders of the Company used to determine diluted earnings per share (HK$’000) Weighted average number of ordinary shares in issue (’000) Adjustments for share options (’000) Weighted average number of ordinary shares for diluted earnings per share (’000) Diluted earnings per share (HK cents)	Unaudited Six months ended 30th September, 2007 2006 29,535 28,195 - - - - - - - - - - - - - - - - - - 429,476 429,476 325 — 429,801 429,476 6.87 6.56	Unaudited Six months ended 30th September, 2007 2006 29,535 28,195 - - - - - - - - - - - - - - - - - - 429,476 429,476 325 — 429,801 429,476 6.87 6.56
		429,476
		6.56

10. DIVIDENDS

Proposed interim dividends of HK1.5 cents (2006: 1.5 cents) per share	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 6,442 6,442

– 75 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

11. CAPITAL EXPENDITURE

Opening net book value as at 1st April, 2007 Additions Disposal Depreciation/Amortisation Currency translation differences Closing net book value as at 30th September, 2007 Opening net book value as at 1st April, 2006 Additions Disposal Depreciation/Amortisation Currency translation differences Closing net book value as at 30th September, 2006

Unaudited For the six months ended 30th September, 2007 Property, plant and equipment Leasehold land and land use rights HK$’000 HK$’000 448,017 26,825 40,640 — (3) — (29,977) (342) 7,481 542 466,158 27,025 Unaudited For the six months ended 30th September, 2006 Property, plant and equipment Leasehold land and land use rights HK$’000 HK$’000 418,904 26,413 53,630 — (130) — (28,153) (326) 5,453 386 449,704 26,473

– 76 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

12. TRADE AND BILLS RECEIVABLE

The Group usually grants to its customers a credit term ranging from 30 days to 120 days.

An aging analysis of trade and bills receivable as at 30th September, 2007 is as follows:

1 to 90 days 91 to 180 days 181 to 365 days Over 365 days Less: Provision for impairment of receivable	Unaudited As at 30th September, 2007 HK$’000 270,969 25,115 1,551 22,899 320,534 (23,636) 296,898	Audited As at 31st March, 2007 HK$’000 168,780 22,759 22,583 4,022
		218,144 (23,127)
		195,017

The carrying amounts of trade and bills receivable approximate their fair values.

There is no concentration of credit risk with respect to trade and bills receivable as the Group has a large number of customers, internationally dispersed.

13. BORROWINGS

Current Trust receipts import bank loans Bank overdrafts Short-term bank loans Current portion of long-term bank loans Non-current Long-term bank loans	Unaudited As at 30th September, 2007 HK$’000 54,976 5,398 49,971 68,961 179,306 117,231 296,537	Audited As at 31st March, 2007 HK$’000 49,391 254 68,607 54,277
		172,529 106,974
		279,503

Short-term bank borrowings bear interest at rates ranging from 5.50% to 9.50% per annum (2007: 5.37% to 9.75% per annum).

Long-term bank loans are secured and bear interest at rates ranging from 4.91% to 8.63% per annum (2007: 4.70% to 6.94% per annum).

– 77 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The maturity of borrowings is as follows:

Within 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years	Unaudited As at 30th September, 2007 HK$’000 179,306 62,965 54,079 187 296,537	Audited As at 31st March, 2007 HK$’000 172,529 54,279 52,494 201
		279,503

14. TRADE AND BILLS PAYABLE

The aging analysis of trade and bills payable is as follows:

1 to 90 days 91 to 180 days 181 to 365 days Over 365 days	Unaudited As at 30th September, 2007 HK$’000 200,508 20,067 2,271 1,725 224,571	Audited As at 31st March, 2007 HK$’000 124,209 20,740 8,038 1,224
		154,211

15. DEFERRED INCOME TAX LIABILITIES

Deferred income tax liabilities are calculated in full on temporary differences under the liability method using a principal tax rate of 17.5% (31st March, 2007: 17.5%).

Deferred income tax liabilities represent the tax effect of the following temporary differences:

Accelerated tax depreciation Others	Unaudited As at 30th September, 2007 HK$’000 13,795 (463) 13,332	Audited As at 31st March, 2007 HK$’000 13,766 (463)
		13,303

– 78 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

16. SHARE CAPITAL

Authorised: Ordinary shares of HK$0.1 each Issued and fully paid: Ordinary shares of HK$0.1 each: Beginning and end of the period/year	Unaudited As at 30th September, 2007 Number of shares Nominal value ’000 HK$’000 1,000,000 100,000 429,476 42,947	Audited As at 31st March, 2007 Number of shares Nominal value ’000 HK$’000 1,000,000 100,000 429,476 42,947	Audited As at 31st March, 2007 Number of shares Nominal value ’000 HK$’000 1,000,000 100,000 429,476 42,947
			42,947

17. RESERVES

Movements were:

Balance at 1st April, 2007 Fair value gains — Other non-current assets Currency translation differences Net income recognised directly in equity Profit attributable to equity holders of the Company Total recognised income for the period 2006/07 final dividends paid Employee share options scheme — Value of employee services Balance at 30th September, 2007	Share premium HK$’000 104,157 — — — — — — — 104,157	For Capital reserve HK$’000 1,169 — — — — — — — 1,169	Unaudited the six months ended 30th September, 2007 Share-based compensation reserve Translation reserve Investment reserve Retained profits HK$’000 HK$’000 HK$’000 HK$’000 1,136 7,662 722 217,285 — — (184) — — 5,891 — — — 5,891 (184) — — — — 29,535 — 5,891 (184) 29,535 — — — (6,442) 409 — — — 1,545 13,553 538 240,378	Total HK$’000 332,131 (184) 5,891
				5,707 29,535
				35,242 (6,442) 409
				361,340

– 79 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Balance at 1st April, 2006 Fair value gains — Other non-current assets Currency translation differences Net income recognised directly in equity Profit attributable to equity holders of the Company Total recognised income for the period 2005/06 final dividends paid Balance at 30th September, 2006	Share premium HK$’000 104,157 — — — — — — 104,157	For Capital reserve HK$’000 1,169 — — — — — — 1,169	Unaudited the six months ended 30th September, 2006 Share-based compensation reserve Translation reserve Investment reserve Retained profits HK$’000 HK$’000 HK$’000 HK$’000 975 (1,814) 359 197,628 — — 93 — — 2,280 — — — 2,280 93 — — — — 28,195 — 2,280 93 28,195 — — — (6,442) 975 466 452 219,381	Total HK$’000 302,474 93 2,280
				2,373 28,195
				30,568 (6,442)
				326,600

18. EMPLOYEE SHARE OPTIONS

The Company has an employee share option scheme, under which it may grant options to employees of the Group (including executive directors of the Company) to subscribe for shares in the Company.

Movements of employee share options during the six months ended 30th September, 2007 are as follows:

Date of grant Exercise period Exercise price per share Old Share Options Scheme 10th September, 1997 11th March, 1998 to 9th September, 2007 HK$0.69 New Share Options Scheme 29th December, 2004 29th June, 2005 to 28th December, 2007 HK$0.77 28th October, 2005 28th April, 2006 to 27th October, 2007 HK$0.72 9th February, 2007 9th August, 2007 to 8th February, 2010 HK$0.48	Beginning of period ’000 3,514 4,852 418 7,585 16,369	Unaudited Number of shares Granted during the period Exercised during the period Lapsed during the period ’000 ’000 ’000 — — (3,514) — — — — — — — — — — — (3,514)	End of period ’000 — 4,852 418 7,585 12,855
		—

– 80 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

19. COMMITMENTS

• (a) Capital commitments

Capital commitments, which were authorised and contracted for, are analysed as follows:

Land Machinery Office equipment	Unaudited As at 30th September, 2007 HK$’000 705 983 159 1,847	Audited As at 31st March, 2007 HK$’000 582 31,846 80
		32,508

(b) Other commitments

The Group had pre-determined fee payable to the joint venture partner of Guangzhou Starlite Environmental Friendly Center, Limited for 50 years up to 2044 amounted to approximately HK$18,078,000 (31st March, 2007: HK$18,226,000).

20. RELATED PARTY TRANSACTIONS

As at 30th September, 2007, approximately 51.54% of the Company’s ordinary shares were owned by Best Grade Advisory Limited, a company incorporated in the British Virgin Islands. Best Grade Advisory Limited is owned by two discretionary trusts, the discretionary beneficiaries of which include Mr. Lam Kwong Yu and Ms. Yeung Chui, directors of the Company. The directors of the Company regard Best Grade Advisory Limited to be the ultimate holding company.

• (a) Particulars of significant transactions between the Group and a related party are summarised as follows:

Operating lease rentals charged by related parties: Megastar Enterprises Limited1	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 29 29

• 1 Megastar Enterprises Limited is beneficially owned by Ms. Yeung Chui, a director of the Company.

In the opinion of the Company’s directors and the Group’s management, the above transactions were carried out in the usual course of business and on normal commercial terms, and in accordance with the terms of the contract entered into by the Group and the related party.

– 81 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(b) Key management compensation

Basic salaries and allowance Pension costs-defined contributions plans Share-based payments	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 4,731 4,726 95 96 227 — 5,053 4,822	Unaudited Six months ended 30th September, 2007 2006 HK$’000 HK$’000 4,731 4,726 95 96 227 — 5,053 4,822
		4,822

– 82 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

IV. STATEMENT OF INDEBTEDNESS

At the close of business on 31 March 2008, being the latest practicable date for this indebtedness statement prior to the printing of the Prospectus, the Group had borrowings of approximately HK$309 million which comprised bank borrowings of approximately HK$306 million (including secured bank borrowings of approximately HK$186 million and unsecured bank borrowings of approximately HK$120 million) and obligation under finance leases of approximately HK$3 million.

The Group’s above secured bank borrowings and finance lease obligations were secured by certain property, plant and equipment, leasehold land and inventories with an aggregate book value of approximately HK$73 million. All bank borrowings were covered by corporate guarantees given by the Company and/or guarantees given by other banks.

Save as aforesaid, and apart from the intra-group liabilities and normal trade debts payable, the Group did not have any outstanding mortgages, charges, debentures, loan capital or overdraft, or other similar indebtedness, finance lease or hire-purchase commitments, liabilities under acceptances or acceptance credits or any guarantees or other material contingent liabilities as at the close of business on 31 March 2008.

Foreign currency amounts have been translated into Hong Kong dollars at the rates of exchange prevailing at the close of business on 31 March 2008.

V. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2007, being the date to which the latest audited financial statements of the Group were made up.

VI. WORKING CAPITAL

The Directors are of the opinion that after taking into account the present internal financial resources of the Group, the available banking facilities and the estimated net proceeds from the Open Offer, the Group has sufficient working capital for its present requirements for at least the next 12 months from the date of this Prospectus.

– 83 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

I. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group prepared in accordance with rule 4.29 of the Listing Rules is set out below to illustrate the effect of the Open Offer on the consolidated net tangible assets of the Group as if the Open Offer had been completed on 30 September 2007.

The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group has been prepared for illustrative purpose only, and because of its hypothetical nature, it may not give a true picture of the financial position of the Group had the Open Offer been completed as at 30 September 2007 or at any future date.

The following unaudited pro forma statement of adjusted consolidated net tangible assets of the Group is based on the unaudited consolidated net tangible assets of the Group as at 30 September 2007 and adjusted to reflect the effect of the Open Offer:

Based on 86,059,197 Offer Shares at subscription price of HK$0.35 per Offer Share	Unaudited consolidated net tangible assets of the Group attributable to the Shareholders as at 30 September 2007 HK$’000 Note 1 404,287	Estimated net proceeds from Open Offer HK$’000 Note 2 28,821	Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the Shareholders HK$’000 433,108	Unaudited pro forma adjusted consolidated net tangible assets per Share HK$ Note 3 0.84

– 84 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Notes:

• 1 The consolidated net tangible assets of the Group attributable to the Shareholders as at 30 September 2007 is extracted from the published interim report of the Group for the six months ended 30 September 2007, which is based on the unaudited consolidated net assets of the Group attributable to the Shareholders as at 30 September 2007 of approximately HK$404,287,000.

• 2 The estimated net proceeds from the Open Offer are based on 86,059,197 Offer Shares to be issued at the Subscription Price of HK$0.35 per Offer Share, after deduction of the related expenses of approximately HK$1.3 million and take no account of any additional Offer Shares to be issued upon the exercise of any outstanding Share Options.

• 3 The unaudited pro forma consolidated net tangible assets per Share is calculated based on the unaudited pro forma consolidated net tangible assets attributable to the Shareholders of approximately HK$433,108,000 and 515,535,186 Shares in issue (on the basis that there were 429,475,989 Shares in issue as at 30 September 2007 and assuming that none of the Share Options were exercised from 1 October 2007 up to the Latest Practicable Date and 86,059,197 Offer Shares were issued under the Open Offer) as if the Open Offer has been completed on 30 September 2007.

• 4 No adjustment has been made to reflect any trading results or other transactions of the Group entered into subsequent to 30 September 2007, including the interim dividend of HK$6,442,000 declared for the six months ended 30 September 2007 and paid on 18 January 2008, and the issuance of 820,000 Shares upon the exercise of Share Options from 1 October 2007 to the Latest Practicable Date.

– 85 –

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

• II. REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

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ACCOUNTANT’S REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION TO THE DIRECTORS OF STARLITE HOLDINGS LIMITED

We report on the unaudited pro forma financial information of Starlite Holdings Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) set out on pages 84 to 85 under the heading of ‘‘Unaudited Pro Forma Statement of Adjusted Consolidated Net Tangible Assets of the Group’’ (the ‘‘Unaudited Pro Forma Financial Information’’) in Appendix II of the Company’s prospectus dated 27 May 2008 (the ‘‘Prospectus’’), in connection with the proposed open offer of the Company. The Unaudited Pro Forma Financial Information has been prepared by the directors of the Company, for illustrative purposes only, to provide information about how the proposed open offer might have affected the relevant financial information of the Group as at 30 September 2007. The basis of preparation of the Unaudited Pro Forma Financial Information is set out on pages 84 to 85 of the Prospectus.

Respective Responsibilities of Directors of the Company and the Reporting Accountant

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with rule 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).

It is our responsibility to form an opinion, as required by rule 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you.

Basis of Opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 ‘‘Accountants’ Reports on Pro Forma Financial Information in Investment Circulars’’ issued by the HKICPA. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unaudited consolidated net tangible assets of the Group attributable to the Company’s equity holders as at 30 September 2007 with the unaudited consolidated balance sheet of the Group as at 30 September 2007 as disclosed in

– 86 –

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

the Company’s interim report for the six months ended 30 September 2007, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the directors of the Company.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to rule 4.29(1) of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgements and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of the adjusted consolidated net tangible assets of the Group as at 30 September 2007 or any future date.

Opinion

In our opinion:

• a) the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;

• b) such basis is consistent with the accounting policies of the Group; and

• c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to rule 4.29(1) of the Listing Rules.

PricewaterhouseCoopers

Certified Public Accountants Hong Kong, 27 May 2008

– 87 –

APPENDIX III

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This Prospectus includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this Prospectus and confirm, having made all reasonable enquires, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date and following completion of the Open Offer was and will be as follows:

Authorised: HK$ 1,000,000,000 Shares 100,000,000

Issued and fully paid or credited as fully paid: 430,295,989 Shares in issue as at the Latest Practicable Date 43,029,599

All of the Shares in issue and the Offer Shares to be issued rank pari passu in all respects with each other, including in particular as to dividends, voting rights and capital.

As at the Latest Practicable Date, the Company has 6,765,000 outstanding and vested Share Options entitling holders thereof to subscribe for 6,765,000 Shares. Save as disclosed above, the Company does not have any other outstanding derivatives, options, warrants and conversion rights or similar rights or securities in issue which are convertible or exchangeable into Shares or Offer Shares.

The Shares in issue are listed on Main Board of the Stock Exchange. No part of the share capital or any other securities of the Company is listed or dealt in on any stock exchange and no application is being made or is currently proposed or sought for the Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

There is no arrangement under which future dividends are waived or agreed to be waived.

Save as disclosed in this Prospectus, no share or loan capital of the Company or any member of the Group has been put under option or agreed conditionally or unconditionally to be put under option and no warrant or conversion right affecting the Shares has been issued or granted or agreed conditionally or unconditionally to be issued or granted.

– 88 –

APPENDIX III

GENERAL INFORMATION

3. PARTIES INVOLVED IN THE OPEN OFFER AND CORPORATE INFORMATION

Head Office and Principal Place of 3/F., Perfect Industrial Building Business in Hong Kong 31 Tai Yau Street Sanpokong Kowloon Hong Kong Registered Office Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda Underwriter Best Grade Advisory Limited Trustnet Chambers P.O. Box 3444, Road Town Tortola, British Virgin Islands Auditor and Reporting Accountant PricewaterhouseCoopers Certified Public Accountants 22nd Floor, Prince’s Building Central Hong Kong Financial Adviser Veda Capital Limited Suite 1302, 13/F Takshing House 20 Des Voeux Road Central Hong Kong Legal Advisers As to Hong Kong Law Richards Butler (in association with Reed Smith LLP) 20th Floor, Alexandra House, 16–20 Chater Road Central Hong Kong As to Bermuda Law Appleby 8th Floor, Bank of America Tower 12 Harcourt Road Central Hong Kong

– 89 –

APPENDIX III

GENERAL INFORMATION

Principal Bankers The Hongkong and Shanghai Banking Corporation Limited 1 Queen’s Road Central Hong Kong Hang Seng Bank Limited 83 Des Voeux Road Central Hong Kong Bank of China (Hong Kong) Limited 1 Garden Road Hong Kong Hong Kong Branch Share Registrar and Tricor Secretaries Limited Transfer Office 26/F, Tesbury Centre 28 Queen’s Road East Wanchai Hong Kong Authorised Representatives Mr. Lam Kwong Yu Ms. Yeung Chui Company Secretary Mr. Cheung Chi Shing, Charles Associate Member of the Hong Kong Institute of Certified Public Accountants and a Fellow Member of The Association of Chartered Certified Accountants Qualified Accountant Mr. Cheung Chi Shing, Charles Associate Member of the Hong Kong Institute of Certified Public Accountants and a Fellow Member of The Association of Chartered Certified Accountants

– 90 –

APPENDIX III

GENERAL INFORMATION

4. DISCLOSURE OF INTERESTS

(a) Directors’ interests in Shares and Share Options

As at the Latest Practicable Date, the interest of the Directors and chief executive of the Company in Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or which were recorded in the register required to be kept by the Company under Section 352 of the SFO, or which were required, pursuant to the Listing Rules, to be notified to the Company and the Stock Exchange, were as follows:

• (i) Long positions in Shares

							Approximate
							% of Total
		Personal	Family	Corporate	Other		Shareholding
Name of Director	Capacity	interests	interests	interests	interests	Total	interest
Mr. Lam	Beneficial owner,	4,380,000	2,760,000	1,012,800	311,634,371	315,728,371	60.20%
	interest of	(Note 1)	(Note 1)	(Note 2)	(Note 3)	(Note 4)	(Note 4)
	spouse, interest
	of controlled
	corporation,
	beneficiary and
	founder of trusts
Ms. Yeung	Beneficial owner,	2,760,000	4,380,000	1,012,800	311,634,371	315,728,371	60.20%
	interest of	(Note 1)	(Note 1)	(Note 2)	(Note 3)	(Note 4)	(Note 4)
	spouse, interest
	of controlled
	corporation,
	beneficiary and
	founder of trusts
Mr. Tai Tzu Shi, Angus	Interest of spouse	—	18,000	—	—	18,000	0.003%
Mr. Cheung Chi Shing,	Beneficiary owner	750,000	—	—	—	750,000	0.14%
Charles

Notes:

1. Mr. Lam and Ms. Yeung are respectively the beneficial owner of 2,150,000 Shares and 1,100,000 Shares and the holders of Share Options entitling them to respectively subscribe for 1,500,000 Shares and 1,200,000 Shares. By virtue of each of their irrevocable undertaking to the Company to take up their pro rata entitlement under the Open Offer and assuming full exercise by each of them of Share Options referred to above, each of them is also respectively deemed to be interested in 730,000 Offer Shares and 460,000 Offer Shares respectively to be issued to them under the Open Offer. Accordingly, the personal interest of each of Mr. Lam and Ms. Yeung is or is deemed to be 4,380,000 Shares in aggregate and 2,760,000 Shares in aggregate respectively. Ms. Yeung is Mr. Lam’s spouse and accordingly, the family interest of Mr. Lam includes Ms. Yeung’s personal interest and the family interest of Ms. Yeung includes Mr. Lam’s personal interest.

– 91 –

APPENDIX III

GENERAL INFORMATION

1. Dayspring is the beneficial owner of 844,000 Shares but by virtue of its irrevocable undertaking to the Company to take up its pro rate entitlement under the Open Offer, it is also deemed to be interested in 168,800 Offer Shares to be issued to it under the Open Offer. Accordingly, Dayspring is interested or deemed to be interested in an aggregate of 1,012,800 Shares. The entire issued share capital of the company is beneficially owned and controlled by Mr. Lam and Ms. Yeung. The 1,012,800 Shares of Mr. Lam and Ms. Yeung were the same block of Shares.

2. Best Grade is the beneficial owner of 224,222,174 Shares but by virtue of its obligations under the Underwriting Agreement, Best Grade is also deemed to be interested in 87,412,197 Offer Shares, being the maximum number of Offer Shares agreed to be taken up by Best Grade as Underwriter under the Open Offer. Accordingly, Best Grade is interested or deemed to be interested in an aggregate of 311,634,371 Shares although as a result of the undertakings given by it, Dayspring, Mr. Lam and Ms. Yeung to take up their pro rata entitlement under the Open Offer, the maximum amount of Offer Shares which Best Grade is required to take up under the Underwriting Agreement should effectively be not more than 41,208,963 Offer Shares. The entire issued share capital of Best Grade is held by Masterline Industrial Limited as trustee of The New Super Star Unit Trust. All except one units in The New Super Star Unit Trust are beneficially owned by two discretionary trusts, the discretionary beneficiaries of which include Mr. Lam, Ms. Yeung and Mr. Lam Chuen Yik, Kenneth. HSBC International Trustee Limited acted as trustee of the two discretionary trusts. The two references to 311,634,371 Shares relate to the same block of the Shares.

3. The total interest of each of Mr. Lam and Ms. Yeung will be less than the sum of each of their personal, family, corporate and other interest as a result of the overlap of (1) the aggregate amount of their personal/family/corporate interest in the Offer Shares (assuming full exercise of the Share Options held by each of them take up the full pro rate entitlement of the Offer Shares under their respective irrevocable undertaking to the Company — see Note 1 above) and (2) their other interest, being Best Grade’s interest in the Offer Shares (taking into account its obligations under the Underwriting Agreement in respect of all of the Offer Shares — see Note 3 above). The approximate percentage of total shareholding interest is calculated based on the total shareholding interest of such party out of the issued share capital of the Company as enlarged by the 6,765,000 Shares to be issued upon exercise of all of the Share Options outstanding and the issue of the 87,412,197 Offer Shares.

– 92 –

APPENDIX III

GENERAL INFORMATION

• (ii) Long positions in underlying Shares pursuant to Share Options granted by the Company

As at the Latest Practicable Date, the numbers of outstanding Share Options of the Company with details were set out as below:

Name Date of grant Exercise period Exercise price per share HK$ (i) Directors Mr. Lam 9.2.2007 9.8.2007–8.2.2010 0.475 Ms. Yeung 9.2.2007 9.8.2007–8.2.2010 0.475 Mr. Tai Tzu Shi, Angus 29.12.2004 29.6.2005–28.12.2007 0.770 9.2.2007 9.8.2007–8.2.2010 0.475 Mr. Cheung Chi Shing, Charles 29.12.2004 29.6.2005–28.12.2007 0.770 9.2.2007 9.8.2007–8.2.2010 0.475 Mr. Lim Pheck Wan, Richard 29.12.2004 29.6.2005–28.12.2007 0.770 28.10.2005 28.4.2006–27.10.2007 0.722 9.2.2007 9.8.2007–8.2.2010 0.475 (ii) Employees 29.12.2004 29.6.2005–28.12.2007 0.770 28.10.2005 28.4.2006–27.10.2007 0.722 9.2.2007 9.8.2007–8.2.2010 0.475	Outstanding at 1.4.2007 ’000 1,500 1,200 1,420 500 1,440 500 100 36 500 1,892 382 3,385 12,855	Granted during the period ’000 — — — — — — — — — — — — —	Exercised during the period ’000 — — — — — — — — — — — (820) (820)	Lapsed during the period ’000 — — (1,420) — (1,440) — (100) (36) — (1,892) (382) — (5,270)	Outstanding at the Latest Practicable Date ’000 1,500 1,200 — 500 — 500 — — 500 — — 2,565
					6,765

Save as disclosed above, none of the Directors or Chief Executive of the Company had, as at the Latest Practicable Date, any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or which were

– 93 –

APPENDIX III

GENERAL INFORMATION

recorded in the register required to be kept by the Company under Section 352 of the SFO, or which were required to be notified to the Company and the Stock Exchange pursuant to the Listing Rules.

(b) Substantial shareholders

So far as is known to any Director or Chief Executive of the Company, as at the Latest Practicable Date, shareholders (other than Directors or Chief Executive of the Company) who had interest or short positions in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO were as follows:

Long positions of substantial shareholders in the Shares

			Approximate
			% of
		Number of	Shareholding
Name of shareholder	Capacity	Shares	interest
Best Grade	Beneficial owner	311,634,371	59.42%
		(Note 1)
Masterline Industrial Limited	Trustee	311,634,371	59.42%
		(Note 1)
HSBC International Trustee	Trustee	311,834,371	59.46%
Limited		(Note 2)

Notes:

1. Best Grade is the beneficial owner of 224,222,174 Shares but by virtue of its obligations under the Underwriting Agreement, Best Grade is also deemed to be interested in 87,412,197 Offer Shares, being the maximum number of Offer Shares agreed to be taken up by Best Grade as Underwriter under the Open Offer. Accordingly, Best Grade is interested or deemed to be interested in an aggregate of 311,634,371 Shares although as a result of the undertakings given by it, Dayspring, Mr. Lam and Ms. Yeung to take up their pro rata entitlement under the Open Offer, the maximum amount of Offer Shares which Best Grade is required to take up under the Underwriting Agreement should effectively be not more than 41,208,963 Offer Shares. The entire issued share capital of Best Grade is held by Masterline Industrial Limited as trustee of The New Super Star Unit Trust. All except one units in The New Super Star Unit Trust are beneficially owned by two discretionary trusts, the discretionary beneficiaries of which include Mr. Lam, Ms. Yeung and Mr. Lam Chuen Yik, Kenneth. HSBC International Trustee Limited acted as trustee of the two discretionary trusts. The two references to 311,634,371 Shares relate to the same block of the Shares.

– 94 –

GENERAL INFORMATION

APPENDIX III

1. 311,634,371 Shares of the 311,834,371 Shares were the same block of Shares as described in Note 1. HSBC International Trustee Limited (‘‘HSBC’’), as trustee of two discretionary trusts in which Mr. Lam, Ms. Yeung and Mr. Lam Chuen Yik, Kenneth were the beneficiaries, were interested and/or deemed to be interested in the said 311,634,371 Shares. The remaining Shares were held by other trusts for which HSBC acted as trustee.

Save as disclosed above, as at the Latest Practicable Date, the Company has not been notified by any persons (other than Directors or Chief Executive of the Company) who had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO.

(c) Directors’ Interests in contracts and assets

As at the Latest Practicable Date, none of the Directors had materially interested in contract or arrangement subsisting which is significant in relation to the business of the Group.

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets acquired or disposed of by or leased to any member of the Group or was proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2007, being the date to which the latest published audited financial statements of the Company were made up.

5. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors nor their respective associated has any business or interest that competes or may compete with the business of the Group or any other conflicts of interest with the Group.

6. LITIGATIONS

As at the Latest Practicable Date, no member of the Group was engaged in any litigation, arbitration or claims of material importance and, so far as the Directors are aware, no litigation or claim of material importance is pending or threatened by or against any member of the Group.

7. SERVICES CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into any service contracts with any member of the Group which can not be terminated by the Company within one year without payment of compensation.

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APPENDIX III

GENERAL INFORMATION

8. EXPERT AND CONSENT

(a) Qualification of expert

The following is the qualification of the expert who has given opinion and advice, which is contained in this Prospectus:

Name Qualifications PricewaterhouseCoopers Certified Public Accountants

(b) Consent of expert

PricewaterhouseCoopers has given and has not withdrawn its written consent to the issue of this Prospectus with the inclusion of its report and the references to its name in the form and context in which they are included.

(c) Interests of expert

As at the Latest Practicable Date, PricewaterhouseCoopers:

• (i) was not interested, directly or indirectly, in any assets which have been acquired or disposed of by or leased to an member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2007, being the date to which the latest published audited financial statements of the Company were made up; and

• (ii) did not have any shareholding interest in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

9. DOCUMENTS DELIVERED TO THE REGISTRARS OF COMPANIES

A copy of the Prospectus Documents and the consent letter referred to the sub-section ‘‘Expert and Consent’’ in the Appendix have been registered with the Registrar of Companies in Hong Kong pursuant to section 342C of the Companies Ordinance. A copy of the Prospectus has also been or will as soon as reasonably practicable be filed with the Registrar of Companies in Bermuda in accordance with the requirements of the Companies Act 1981 of Bermuda.

10. MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business) have been entered into by the members of the Group within the two years immediately preceding the Latest Practicable Date:

• (i) a sale and purchase agreement (the ‘‘Sale and Purchase Agreement’’) dated 11 April 2007 entered into between Mr. Lim Kian Tiong, Ms. Soo Ying Seong and Mr. Teo Hock Seng (collectively, the ‘‘Vendors’’) and Starlite Printers (Far East)

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APPENDIX III

GENERAL INFORMATION

Pte Ltd, a wholly-owned subsidiary of the Company (the ‘‘Purchaser’’) pursuant to which the Purchaser has agreed to purchase from the Vendors in aggregate 150,000 shares representing 75% of the issued share capital of Taspack Industrial Sdn. Bhd., a private company incorporated in Malaysia and a termination agreement dated 11 September 2007. The Purchaser and the Vendors entered into a written agreement on 11 September 2007 for the termination of the Sale and Purchase Agreement as the conditions precedent (as defined in the Sale and Purchase Agreement) could not be fulfilled; and

• (ii) the Underwriting Agreement.

11. MISCELLANEOUS

In the event of inconsistency, the English version of this Prospectus shall prevail over the Chinese text.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the principal place of business of the Company at 3/F., Perfect Industrial Building, 31 Tai Yau Street, Sanpokong, Kowloon, Hong Kong during normal business hours on any weekday other than public holidays, up to and including Tuesday, 10 June 2008:

• (a) the Memorandum of Association and Bye-Laws of the Company;

• (b) the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ in this Appendix;

• (c) the annual reports of the Group for the two years ended 31 March 2006 and 2007;

• (d) the interim report of the Company for the six months ended 30 September 2007;

• (e) the report on the unaudited pro forma financial information of the Group from PricewaterhouseCoopers, the text of which is set out on pages 86 to 87 of this Prospectus;

• (f) the consent letter from PricewaterhouseCoopers referred to in the paragraph headed ‘‘Expert and Consent’’ in this Appendix; and

• (g) this Prospectus.

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