09:07     START TECH<00706> - Announcement (2)                                

    (i)     Software Company recorded a net loss (before                      
    taxation and extraordinary items) of RMB1,997,000 for                     
    the year ended 31 December 2003 but for the 11 months                     
    ended 30 November 2004, Software Company had recorded                     
    a net profit of RMB198,000. The Directors considered                      
    that the profits of Software Company has improved;                        
                                                                              
    (ii)    Software Company was the flagship subsidiary of                   
    the Company in the PRC which held various investments                     
    of the Group in the PRC. After completion of the Equity                   
    Transfer Agreement, Software Company would become a                       
    wholly owned subsidiary of the Company and the                            
    operation and management of Software Company would                        
    be wholly controlled by the Group.                                        
                                                                              
    After considering the above factors, the Directors                        
    (including the independent non-executive Directors)                       
    were of the view that the terms of the Equity Transfer                    
    Agreement were normal commercial terms and were fair                      
    and reasonable and in the interests of the                                
    shareholders of the Company as a whole.                                   
                                                                              
    The consideration shall be paid by Stepping Stones                        
    within five business days from the date of approval                       
    of the Equity Transfer Agreement by the relevant PRC                      
    governmental authority in cash or by such other method                    
    as may be agreed by the parties and will be funded                        
    by the Group's internal resources. The parties have                       
    agreed that the consideration would be settled in                         
    cash.                                                                     
                                                                              
    Information of Software Company                                           
    Software Company is a wholly foreign-owned enterprise                     
    established in the PRC on 14 July 2000 with a                             
    registered capital of HK$47,800,000. Software                             
    Company is principally engaged in the provision of                        
    software development and systems integration                              
    services covering healthcare security, social                             
    security, hospital information management systems                         
    and public security sectors. As at the date of the                        
    Equity Transfer Agreement, Software Company was owned                     
    as to 12.2% by Star Gain and as to 87.8% by Stepping                      
    Stones. Star Gain is an investment holding company                        
    incorporated in the BVI. Star Gain acquired its                           
    interests in Software Company in March 2003 at an                         
    investment cost of RMB6,229,800 (equivalent to                            
    approximately HK$5,877,000).                                              
                                                                              
    As at 30 November 2004, the unaudited net assets of                       
    Software Company was approximately HK$33,160,000.                         
                                                                              
    The unaudited net (loss)/profit of Software Company                       
    for the two years ended 31 December 2003 and the                          
    unaudited net profit of Software Company for the 11                       
    months ended 30 November 2004 (prepared in accordance                     
    with Hong Kong GAAP) are as follows:                                      
                                                                              
    For the year            For the year            For the 11 months         
    ended           ended           ended                                     
    31 December             31 December             30 November               
    2002            2003            2004                                      
                                                                              
    Net profit/(loss) (before taxation and extraordinary                      
    items)  RMB9,848,000            RMB(1,997,000   )                         
            RMB198,000                                                        
    Net profit/(loss) (after taxation and extraordinary                       
    items)  RMB9,347,000            RMB(1,531,000   )                         
            RMB19,000                                                         
                                                                              
    The unaudited net assets and total asset value of