10:25 CLIMAX INT'L<00439> - Announcement (3) extraordinary items) of Easyfil Hong Kong for 2005 and 2004 being the two financial years immediately preceding the transaction are HK$478,000 and HK$478,000 ((unaudited) in respect of the financial year ended 31 March 2005) and HK$121,000 and HK$121,000 ((audited) in respect of the financial year ended 31 March 2004). INFORMATION ON OUTSTANDING BALANCES The amounts due from Easyfil Hong Kong to the Company and its subsidiaries on or before completion of the Agreement was recorded at HK$5,702,000. The amounts due to Easyfil Hong Kong from the Company and its subsidiaries on or before completion of the Agreement was recorded at HK$821,000. Accordingly, the net value of the Outstanding Balances due from Easyfil Hong Kong to the Company and its subsidiaries is HK$4,881,000. INFORMATION ON THE PRC DISTRIBUTION BRANCH The PRC Distribution Branch is a branch of the PRC Subsidiary, an indirect wholly owned foreign investment enterprise of the Company, engaged in the business of, amongst other things, manufacturing, marketing and distributing paper products, including stationery, through the "Easyfil" brand name in the PRC. The PRC Distribution Branch had an unaudited net asset value of approximately HK$419,000 (in respect of the financial year ended 31 March 2005) and audited net asset value of approximately HK$230,000 (in respect of the financial year ended 31 March 2004). The unaudited net profit (both before and after taxation and extraordinary items) of the PRC Distribution Branch for 2005 was approximately HK$189,000. The audited net loss (both before and after taxation and extraordinary items) of the PRC Distribution Branch for 2004 was approximately HK$525,000. INFORMATION ON THE TRADEMARKS The Trademarks used by Easyfil Hong Kong and the PRC Distribution Branch in respect of the "Easyfil" brand business conducted by them are registered or are in the process of being registered in the names of the Assignors. As the Trademarks are not ascribed a specific value in the books and records of the Company or the Assignors, the Company considered it appropriate to have them valued for the purposes of the Disposal. The Trademarks were determined on 28 February 2005 to have a value of HK$2,940,000 by Vigers Appraisal and Consulting Limited, an independent valuer. Each of the existing owners of the Trademarks, namely Climax Paper Converters, Limited, Climax Patent & Trademark Limited and Easyfil International Company Limited are wholly-owned subsidiaries of the Company. DESCRIPTION OF THE PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY The Company conducts the business of manufacturing, marketing and distributing paper products through several brand names, one of which is "Easyfil", the subject of the Disposal. The Company is also engaged in the original equipment manufacturing business, whereby the Company buys materials and manufactures paper products for wholesalers and retail chain stores worldwide. DESCRIPTION OF THE PRINCIPAL BUSINESS ACTIVITIES OF VEVION Vevion is principally engaged in the photo-finishing business and the trading and sale of photo-graphical and audio-visual products. REASONS FOR THE DISPOSAL The Company has entered into the transaction to realise value in Easyfil Hong Kong, having taken into account the minimal contribution of the "Easyfil" brand business conducted by Easyfil Hong Kong and the PRC Distribution Branch to the Company in the preceding financial years. Following the Disposal, the Company will no longer be engaged in the business of manufacturing, marketing and distributing paper products under the "Easyfil" brand in Hong Kong and the PRC. Although the Company will continue to be engaged in the business of manufacturing, marketing and distributing paper products, the Company plans to allocate more of its resources and focus on its original equipment manufacturing business of manufacturing, marketing and distributing paper products, including stationery for wholesalers and retail chain stores. The Company will use the consideration for the sale of the Sale Shares for general working capital purposes. Upon completion of the Disposal, a gain of HK$11,370,000 is expected to accrue to the Company, calculated on the basis of the difference between the consideration of HK$8,000,000 and the net value of the Assets, including the writing-off of the Outstanding Balances of Easyfil Hong Kong as at 31 March 2005.