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NOTESTOTHEFINANCIALSTATEMENTSFortheyearended31stDecember2005451.GENERALTheCompanyisincorporatedinBermudaasanexemptedcompanywithlimitedliabilityanditssharesarelistedonTheStockExchangeofHongKongLimited(the“StockExchange”).TheaddressesoftheregisteredofficeandprincipalplaceofbusinessoftheCompanyaredisclosedinthecorporateinformationoftheannualreport.ThefinancialstatementsarepresentedinHongKongdollars,whichisthesameasthefunctionalcurrencyoftheCompanyanditssubsidiaries(the“Group”).TheCompanyactsasaninvestmentholdingcompany.Theprincipalactivitiesofitsprincipalsubsidiariesaretradinganddistributionofchemicals,materialsandequipmentusedinthemanufactureofprintedcircuitboardsandelectronicproductsandthemanufactureofelectricalandelectronicproductsforOEMcustomers.2.APPLICATIONOFHONGKONGFINANCIALREPORTINGSTANDARDS/CHANGESINACCOUNTINGPOLICIESInthecurrentyear,theGrouphasapplied,forthefirsttime,anumberofnewHongKongFinancialReportingStandards(“HKFRSs”),HongKongAccountingStandards(“HKASs”)andInterpretations(hereinaftercollectivelyreferredtoas“newHKFRSs”)issuedbytheHongKongInstituteofCertifiedPublicAccountants(“HKICPA”)thatareeffectiveforaccountingperiodsbeginningonorafter1stJanuary2005.TheapplicationofthenewHKFRSshasresultedinachangeinthepresentationoftheconsolidatedincomestatement,consolidatedbalancesheet,consolidatedcashflowstatementandtheconsolidatedstatementofchangesinequity.Inparticular,thepresentationofminorityinterestsandshareoftaxofassociateshavebeenchanged.Thechangesinpresentationhavebeenappliedretrospectively.TheadoptionoftheHKFRSshasresultedinchangestotheGroup’saccountingpoliciesinthefollowingareasthathaveaneffectonhowtheresultsforthecurrentand/orprioraccountingyearsarepreparedandpresented:1.2./462.APPLICATIONOFHONGKONGFINANCIALREPORTINGSTANDARDS/CHANGESINACCOUNTINGPOLICIES(Continued)Share-basedPaymentsInthecurrentyear,theGrouphasappliedHKFRS2Share-basedPaymentwhichrequiresanexpensetoberecognisedwheretheGroupbuysgoodsorobtainsservicesinexchangeforsharesorrightsovershares(“equity-settledtransactions”),orinexchangeforotherassetsequivalentinvaluetoagivennumberofsharesorrightsovershares(“cash-settledtransactions”).TheprincipalimpactofHKFRS2ontheGroupisinrelationtotheexpensingofthefairvalueofshareoptionsgrantedtodirectorsandemployeesoftheCompany,determinedatthedateofgrantoftheshareoptions,overthevestingperiod.TheGrouphasappliedHKFRS2toshareoptionsgrantedonorafter1stJanuary2005.Thischangeinaccountingpolicyhashadnoeffectontheresultsforprioryears.FinancialinstrumentsInthecurrentyear,theGrouphasappliedHKAS32“FinancialInstruments:DisclosureandPresentation”andHKAS39“FinancialInstruments:RecognitionandMeasurement”.HKAS32requiresretrospectiveapplication.HKAS39,whichiseffectiveforannualperiodsbeginningonorafter1stJanuary2005,generallydoesnotpermittherecognition,derecognitionormeasurementoffinancialassetsandliabilitiesonaretrospectivebasis.TheprincipaleffectsresultingfromtheimplementationofHKAS39aresummarisedbelow:ClassificationandmeasurementoffinancialassetsandfinancialliabilitiesTheGrouphasappliedtherelevanttransitionalprovisionsinHKAS39withrespecttotheclassificationandmeasurementoffinancialassetsandfinancialliabilitiesthatarewithinthescopeofHKAS39.2./22232393239393939472.APPLICATIONOFHONGKONGFINANCIALREPORTINGSTANDARDS/CHANGESINACCOUNTINGPOLICIES(Continued)Financialinstruments(Continued)DebtandequitysecuritiespreviouslyaccountedforunderthebenchmarktreatmentofStatementofStandardAccountingPractice(“SSAP”)24At31stDecember2004,theGroupclassifiedandmeasureditsdebtandequitysecuritiesinaccordancewiththebenchmarktreatmentofSSAP24.investmentsindebtorequitysecuritiesareclassifiedas“investmentsecurities”,“otherinvestments”or“held-to-maturityinvestments”asappropriate.“Investmentsecurities”arecarriedatcostlessimpairmentlosses(ifany)while“otherinvestments”aremeasuredatfairvalue,withunrealisedgainsorlossesincludedinprofitorloss.Held-to-maturityinvestmentsarecarriedatamortisedcostlessimpairmentlosses(ifany).From1stJanuary2005onwards,theGrouphasclassifiedandmeasureditsdebtandequitysecuritiesinaccordancewithHKAS39.UnderHKAS39,financialassetsareclassifiedas“financialassetsatfairvaluethroughprofitorloss”,“available-for-salefinancialassets”,“loansandreceivables”or“held-to-maturityfinancialassets”.“Financialassetsatfairvaluethroughprofitorloss”and“available-for-salefinancialassets”arecarriedatfairvalue,withchangesinfairvaluesrecognisedinprofitorlossandequityrespectively.Available-for-saleequityinvestmentsthatdonothavequotedmarketpricesinanactivemarketandwhosefairvaluecannotbereliablymeasuredandderivativesthatarelinkedtoandmustbesettledbydeliveryofsuchunquotedequityinstrumentsaremeasuredatcostlessimpairmentafterinitialrecognition.“Loansandreceivables”and“held-to-maturityfinancialassets”aremeasuredatamortisedcostusingtheeffectiveinterestmethodafterinitialrecognition.AllinvestmentsinsecuritiesandotherassetsoftheGroupasat31stDecember2004amountingtoapproximatelyHK$11,052,000andHK$11,325,000respectivelyhavebeenreclassifiedtoavailable-for-saleinvestmentsamoun