09:44 VISION TECH<00922> - Announcement (10) of the effective date of the Capital Reorganisation. Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Reduced Shares upon implementation of the Capital Reorganisation. Effects of the Capital Reorganisation Implementation of the Capital Reorganisation would not, by itself, alter the underlying assets, liabilities, businesses, management or financial position of the Company and the Group or the rights of the Shareholders except for the payment of related expenses. The proportionate interests and voting rights of the Shareholders in the Company will not be affected by the Capital Reorganisation. Free exchange of Reduced Share certificates and trading arrangements Subject to the Capital Reorganisation becoming effective, Shareholders may, during a specified period, submit certificates for the existing Shares to the Company's registrar, for exchange, at the expense of the Company, for certificates for the Reduced Shares. Thereafter, certificates for the existing Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may from time to time be allowed by the Stock Exchange) for each new certificate issued for Reduced Shares. Nevertheless, certificates for the Shares will continue to be good evidence of legal title and may be exchanged for certificates for the Reduced Shares at any time at the expense of the Shareholders. Arrangement for matching service for odd lots In order to alleviate the difficulties arising from the existence of odd lots of the Reduced Shares, the Company has agreed to procure an agent to arrange the matching of the sales and purchases of odd lots of the Reduced Shares after the suspension of the Shares has been lifted by the Stock Exchange. Details of the colour of the new share certificates and odd lots arrangements will be provided in the circular to be despatched to the Shareholders. Reasons for the Capital Reduction As at 31st March, 2004, the Group had accumulated losses of approximately HK$165,734,000. The Directors believe that it is unlikely that the Group will generate sufficient profits in the immediate future to eliminate this deficit and that it would not be appropriate for the Company to pay dividends while the deficit remains. The proposed Capital Reorganisation will provide greater flexibility for the Company's dividend policy by assisting the Group in eliminating its accumulated losses. The estimated costs of the Capital Reorganisation are insignificant. The Directors consider that the current economic climate makes it a suitable time for the Capital Reorganisation and that the Capital Reorganisation will enable the Company to declare dividends to its Shareholders at a much earlier time than it would otherwise be able to, which will benefit the Shareholders as a result. Reasons for change in board lot Upon the change in board lot size, the market value of each board lot of 50,000 Reduced Shares will be 25 times the market value of the current board lot of 2,000 Shares. Based on the closing price quoted on the Stock Exchange on the last trading day prior to the publication of this announcement of HK$0.049 per Share, the value per board lot of 2,000 Shares and 50,000 Reduced Shares are HK$98 and HK$2,450 respectively. The transaction cost per dollar value of each Reduced Share will therefore be lower and the Directors are of the view that the change in the board lot size of the Company is in the interest of the Company and the Shareholders. CURRENT STATUS OF THE GROUP The Group is principally engaged in the distribution of home appliance products. The turnover of the Group for the two years ended 31st March, 2004 were approximately HK$37.5 million and HK$15.4 million respectively. The loss attributable to Shareholders for the year ended 31st March, 2003 was approximately HK$155.5 million, and the profit attributable to Shareholders for the year ended 31st March, 2004 was approximately HK$33.0 million. As at 31st March, 2004, the Group had audited net liabilities of approximately HK$4.6 million. The Directors are aware that the price in the Shares is approaching the extremities of HK$0.01 set out in Rule 13.64 of the Listing Rules. The Directors are also aware that a listed issuer is required to either change the trading method or to proceed with a consolidation of its shares in such event. The Company will conduct a consolidation exercise if the price in the Shares continue to trade at a price close to such extremities. In such event, further announcement will be issued. The Stock Exchange reserves its right to require the Company to undertake such exercise before granting an approval for listing of any fund raising by the Company. The Stock Exchange has stated that the Company has to undertake the consolidation of Shares before resumption of its Shares.