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 adviser.
If you have sold or transferred all your securities in Forefront Group Limited, you should at once hand the Prospectus Documents to the purchaser(s) or to the transferee(s) or to the bank, licensed
securities dealer or other agent through whom the sale was effected for transmission to the purchaser or to the transferee.
Dealings in shares of the Company may be settled through CCASS and you should consult a licensed securities dealer, 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.
A copy of each of the Prospectus Documents, having attached thereto the documents specified in the paragraph headed “Document delivered to the Registrar of Companies” in Appendix III to this
Prospectus, has been registered with the Registrar of Companies in Hong Kong pursuant to section 342C of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong). The Registrar of
Companies in Hong Kong and SFC take no responsibility as to the contents of any of these documents.
Subject to the granting of the listing of, and permission to deal in, the Rights Shares (in both their nil-paid and fully-paid forms) on the Stock Exchange and subject to compliance with the stock
admission requirements of HKSCC, the Rights Shares (in both their nil-paid and fully-paid forms) will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS
with effect from the relevant commencement dates of dealings in the Rights Shares (in both their nil-paid and fully-paid forms) on the Stock Exchange or such other dates as determined by HKSCC.
Settlement of transactions between participants on 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.

(incorporated in the Cayman Islands with limited liability)
(Stock Code: 0885)
RIGHTS ISSUE OF 892,906,512 RIGHTS SHARES OF HK$0.10 EACH
AT HK$0.20 PER RIGHTS SHARE ON THE BASIS OF
ONE RIGHTS SHARE FOR EVERY TWO EXISTING SHARES
HELD ON RECORD DATE
BY QUALIFYING SHAREHOLDERS

Underwriter
CHUNG NAM SECURITIES LIMITED

The latest time for acceptance of, and payment for, the Rights Shares is 4:00 p.m. on 22 January 2008. The procedure for acceptance and payment and/or transfer of the Rights Shares is set out on
pages 15 to 18 of this Prospectus.
It should be noted that the Underwriter may terminate the arrangements set out in the Underwriting Agreement by notice in writing given to the Company at any time prior to 4:00 p.m. on the second
Business Day after the Acceptance Date, if:
(i) the occurrence of the following events would, in the reasonable opinion of the Underwriter, materially and adversely affect the business, financial or trading position or prospects of the Group
as a whole or otherwise makes it inexpedient or inadvisable for the Company or the Underwriter to proceed with the Rights Issue:
(a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever;
(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 of
the Underwriting Agreement) 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
(c) the occurrence of any change in market conditions or combination of circumstances in Hong Kong (including without limitation suspension or material restriction on trading in securities);
(ii) any change occurs in the circumstances of the Company or any member of the Group which would materially and adversely affect the prospects of the Group as a whole;
(iii) the Company commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under the Underwriting Agreement;
(iv) the Underwriter shall receive notification pursuant to the terms of the Underwriting Agreement or shall otherwise become aware of, the fact that any of the representations or warranties
contained in the Underwriting Agreement was, when given, untrue or inaccurate or would in any respect be untrue or inaccurate if repeated as provided in the Underwriting Agreement and the
Underwriter shall in its reasonable opinion determine that any such untrue representation or warranty represents or is likely to represent a material and adverse change in the business, financial
or trading position or prospects of the Group as a whole or is otherwise likely to have a material and adverse effect on the Rights Issue; or
(v) the Company shall, after a certain matter or event referred to in the Underwriting Agreement has occurred or come to the attention of the Underwriter, fail promptly to send out any
announcement or circular (after the despatch of the Prospectus Documents), in such manner (and as appropriate with such contents) as the Underwriter may reasonably request for the purpose of
preventing the creation of a false market in the securities of the Company.
It should also be noted that the Shares have be traded on an ex-rights basis as from Thursday, 20 December 2007 and that dealings in the Rights Shares in their nil-paid form will commence from
Thursday, 10 January 2008 to Thursday, 17 January 2008 (both dates inclusive), when the conditions to which the Rights Issue subject to are yet to be fulfilled.
Any person dealing in the Rights Shares in their nil-paid form or until the date on which all conditions to which the Rights Issue is subject to are fulfilled shall accordingly bear the risk that the Rights
Issue may not become unconditional. If the conditions of the Rights Issue are not fulfilled or the Underwriting Agreement is terminated by the Underwriter according to the terms thereof, the Rights
Issue will not proceed. Investors may wish to obtain professional advice regarding dealings in shares of the Company or nil-paid Rights Shares during these periods.
4 January 2008

App
R7.1
R7.1

– i –

CONTENTS
Definitions	1
Expected timetable of the Rights Issue	5
Summary of the terms of the Rights Issue	7
Termination of the Underwriting Agreement	8
Letter from the Board	10
Appendix I – Financial and other information	28
Appendix II – Pro-forma financial information	73
Appendix III – General information	76
Appendix IV – Notice to Overseas Shareholders	92

– 1 –
DEFINITIONS

In this Prospectus, the following expressions shall have the following meanings unless the
context indicates otherwise:
“Announcement” an announcement of the Company dated 4 December 2007
regarding the Rights Issue
“Acceptance Date” latest day for acceptance of and payment for the Rights
Shares which is expected to be at 4:00 p.m. on 22 January
2008

“Board” the board of Directors
“Business Day” a day on which banks in Hong Kong are generally open for
business (other than a Saturday or Sunday and any day on
which a tropical cyclone warning No. 8 or above is hoisted
or remains hoisted between 9:00 a.m. and 12:00 noon and
is not lowered at to before 12:00 noon or on which a “black”
rainstorm warning signal is hoisted or remains in effect
between 9:00 a.m. and 12:00 noon and is not discontinued
at or before 12:00 noon)
“Convertible Notes” convertible notes in the principal amount of up to HK$600
million issued pursuant to the placing agreement entered
into between the Company and Chung Nam Securities
Limited dated 9 July 2007, the placing of such convertible
notes was completed on 16 August 2007
“CCASS” the Central Clearing and Settlement System established and
operated by HKSCC
“Company” Forefront Group Limited, a company incorporated in the
Cayman Islands with limited liability and the Shares of
which are listed on the Stock Exchange
“Directors” the directors of the Company
“Group” the Company and its subsidiaries

– 2 –
DEFINITIONS

“HK$” Hong Kong dollar, the lawful currency of Hong Kong
“HKSCC” Hong Kong Securities Clearing Company Limited
“Hong Kong” the Hong Kong Special Administrative Region of the
People’s Republic of China
“Latest Practicable Date” 1:00 p.m. on 24 December 2007, being the latest practicable
date and time prior to the printing of this Prospectus for
the purpose of ascertaining certain information contained
therein
“Listing Rules” Rules Governing the Listing of Securities on the Stock
Exchange
“Non-Qualifying Shareholder(s)” Shareholder(s) whose name(s) appear(s) on the register of
members of the Company on the Record Date and whose
address(es) as shown on the register of members of the
Company on the Record Date is (are) outside Hong Kong
where the Directors, based on the legal opinions provided
by legal advisers, consider it necessary or expedient to
exclude any such Shareholder because of either the legal
restrictions under the laws of the place of his registered
address or the requirements of the relevant regulatory body
or stock exchange in that place
“Option(s)” the share option(s) to subscribe up to an aggregate of
147,491,872 Shares pursuant to the share option scheme of
the Company adopted on 6 August 2007 based on the
scheme mandate available to the Company as at the Latest
Practicable Date
“Overseas Shareholders” Shareholder(s) whose name(s) appear on the register of
members of the Company at the close of business on the
Record Date and whose address(es) as shown on such
register is/are in a place(s) outside Hong Kong

– 3 –
DEFINITIONS

“Posting Date” 4 January 2008, the expected date for despatch of the
Prospectus Documents to the Qualifying Shareholders or
the Prospectus to the Non-Qualifying Shareholders (as the
case may be)
“Prospectus” the prospectus to be issued by the Company in relation to
the Rights Issue
“Prospectus Documents” the Prospectus, the provisional allotment letter and form of
application for excess Rights Shares
“Qualifying Shareholder(s)” Shareholder(s), other than the Non-Qualifying
Shareholder(s), whose name(s) appear(s) on the register of
members of the Company on the Record Date
“Record Date” 3 January 2008, the record date by which entitlements to
the Rights Issue will be determined or such other date as
the Underwriter may agree in writing with the Company
for the determination of the entitlements under the Rights
Issue
“Registrar” Tricor Tengis Limited, 26th Floor, Tesbury Centre, 28
Queen’s Road East, Wanchai, Hong Kong
“Rights Issue” the issue of 892,906,512 Rights Shares at a price of HK$0.2
per Rights Share
“Rights Shares” 892,906,512 new Shares to be issued under the Rights Issue
“Settlement Date” the second Business Day after the Acceptance Date or such
other date as the Underwriter may agree in writing with the
Company
“Shareholder(s)” holder(s) of the Share(s)
“Share(s)” share(s) of HK$0.1 each in the existing capital of the
Company

– 4 –
DEFINITIONS

“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Underwriter” Chung Nam Securities Limited, a corporation deemed
licensed under the Securities and Futures Ordinance
(Chapter 571 of the Laws of Hong Kong) to carry out type
1 regulated activity (dealing in securities), which is not a
connected person (as defined in the Listing Rules) of the
Company
“Underwriting Agreement” the underwriting agreement dated 3 December 2007 and
entered into between the Company and the Underwriter in
relation to the Rights Issue
“Underwritten Shares” all the Rights Shares

– 5 –
EXPECTED TIMETABLE OF THE RIGHTS ISSUE

The expected timetable for the Rights Issue is set out below:
Register of members closes (both dates inclusive) . . . . . . . . 24 December 2007 to 3 January 2008
Record date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 January 2008
Register of members re-opens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 January 2008
First day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 January 2008
Latest time for splitting nil-paid Rights Shares . . . . . . . . . . . . . . . . . . 4:00 p.m. on 14 January 2008
Last day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 January 2008
Latest time for acceptance of, payment for Rights Shares
and application for excess Rights Shares . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on 22 January 2008
Expected time for the Rights Issue
to become unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on 24 January 2008
Announcement of results of the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 January 2008
Refund cheques in respect of wholly or partially
unsuccessful applications for excess Rights Shares expected
to be despatched on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 January 2008
Certificates for fully-paid Rights Shares expected
to be despatch on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 January 2008
Dealings in fully-paid Rights Shares expected
to commence on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 January 2008
App

– 6 –
EXPECTED TIMETABLE OF THE RIGHTS ISSUE

Notes:
1. Dates or deadlines specified in the Prospectus for events in the timetable for (or otherwise in relation to) the
Rights Issue are indicative only and may be extended or varied by the Company. Any change to the anticipated
timetable for the Rights Issue will be published as and when appropriate.
2. The latest time for acceptance of and payment for Rights Shares will not take place if there is:
– a tropical cyclone warning signal number 8 or above; or
– a “black” rainstorm warning
(a) in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00
noon on the last acceptance date as stated above. Instead the latest time of acceptance of and
payment for the Rights Shares will be extended to 5:00 p.m. on the same Business Day;
(b) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the last acceptance
date as stated above. Instead, the latest time of acceptance of and payment for the Rights Shares
will be rescheduled to 4:00 p.m. on the following Business Day on which does not have either of
those warnings in force at any time between 9:00 a.m. and 4:00 p.m.

– 7 –
SUMMARY OF THE TERMS OF THE RIGHTS ISSUE

The following information is derived from, and should be read in conjunction with, the full
text of this Prospectus:
Basis of the Rights Issue : one Rights Share for every two existing Shares held on the
Record Date
Number of Rights Shares : 892,906,512 Rights Shares, representing approximately 50%
to be issued of the existing issued share capital of the Company and 33.3%
of the enlarged issued share capital of the Company upon the
completion of the Rights Issue
Amount to be raised : approximately HK$172 million after expenses
Subscription price : HK$0.2 per Rights Share with nominal value of HK$0.1 each
Latest time for acceptance : 4:00 p.m. on 22 January 2008
Excess application : Qualifying Shareholders may apply for Rights Shares in excess
of their provisional allotments
Status of Rights Shares : When fully-paid, issued and allotted, the Rights Shares will
rank pari passu in all respects with the then existing Shares.
Holders of fully-paid Rights Shares will be entitled to receive
all future dividends and distributions which are declared, made
or paid after the date of issue and allotment of the fully-paid
Rights Shares
App

– 8 –
TERMINATION OF THE UNDERWRITING AGREEMENT
TERMINATION OF THE UNDERWRITING AGREEMENT

The Underwriter shall have the right to terminate the arrangements set out in the
Underwriting Agreement by notice in writing given to the Company at any time prior to 4:00 p.m.
on the second Business Day after the Acceptance Date, if:
(i) the occurrence of the following events would, in the reasonable opinion of the
Underwriter, materially and adversely affect the business, financial or trading position
or prospects of the Group as a whole or otherwise makes it inexpedient or inadvisable
for the Company or the Underwriter to proceed with the Rights Issue:
(a) the introduction of any new law or regulation or any change in existing law or
regulation (or the judicial interpretation thereof) or other occurrence of any
nature whatsoever;
(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 of the Underwriting Agreement) 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
(c) the occurrence of any change in market conditions or combination of
circumstances in Hong Kong (including without limitation suspension or material
restriction on trading in securities);
(ii) any change occurs in the circumstances of the Company or any member of the Group
which would materially and adversely affect the prospects of the Group as a whole;
(iii) the Company commits any breach of or omits to observe any of the obligations or
undertakings expressed to be assumed by it under the Underwriting Agreement;
(iv) the Underwriter shall receive notification pursuant to the terms of the Underwriting
Agreement or shall otherwise become aware of, the fact that any of the representations
or warranties contained in the Underwriting Agreement was, when given, untrue or
inaccurate or would in any respect be untrue or inaccurate if repeated as provided in
the Underwriting Agreement and the Underwriter shall in its reasonable opinion
determine that any such untrue representation or warranty represents or is likely to
represent a material and adverse change in the business, financial or trading position
or prospects of the Group as a whole or is otherwise likely to have a material and
adverse effect on the Rights Issue; or

– 9 –
TERMINATION OF THE UNDERWRITING AGREEMENT

(v) the Company shall, after any matter or event referred to in the Underwriting Agreement
has occurred or come to the attention of the Underwriter, fail promptly to send out
any announcement or circular (after the despatch of the Prospectus Documents), in
such manner (and as appropriate with such contents) as the Underwriter may reasonably
request for the purpose of preventing the creation of a false market in the securities
of the Company.
The Shares have been traded on an ex-rights basis from Thursday, 20 December 2007 and
dealing in the Rights Shares in nil-paid form are expected to take place from Thursday, 10 January
2008 to Thursday, 17 January 2008 (both days inclusive), when the conditions to which the Rights
Issue subject to are yet to be fulfilled. Any person dealing in the Shares or the Rights Shares in
their nil-paid form or until the date on which all conditions to which the Rights Issue subject to are
fulfilled shall accordingly bear the risk that the Rights Issue may not become unconditional. If the
conditions of the Rights Issue are not fulfilled or the Underwriting Agreement is terminated by the
Underwriter according to the terms thereof, the Rights Issue will not proceed.

– 10 –
LETTER FROM THE BOARD

(incorporated in the Cayman Islands with limited liability)
(Stock Code: 0885)
Executive Directors: Registered office:
Ms. Yau Shum Tek, Cindy (Chairman) P.O. Box 309, Ugland House,
Mr. Yeung Ming Kwong South Church Street, George Town,
Ms. Lo Oi Kwok, Sheree Grand Cayman, Cayman Islands,
Mr. Ting Wing Cheung, Sherman British West Indies.
Mr. Louis Wen
Mr. Zhou Qi Jin Head office and principal place of
Mr. Zhuang You Dao business:
Room 328, Hi-Tech Centre,
Independent non-executive Directors: 9 Choi Yuen Road,
Mr. Chung Yuk Lun Sheung Shui,
Mr. Kwong Wai Tim, William New Territories,
Ms. Lam Yan Fong, Flora Hong Kong.
Ms. Kristi L Swartz
4 January 2008
To the Shareholders
Dear Sir/Madam,
RIGHTS ISSUE OF 892,906,512 RIGHTS SHARES OF

HK$0.10 EACH AT HK$0.20 PER RIGHTS SHARE
ON THE BASIS OF ONE RIGHTS SHARE
FOR EVERY TWO EXISTING SHARES
HELD ON RECORD DATE
BY QUALIFYING SHAREHOLDERS
I. INTRODUCTION

On 4 December 2007, the Board announced that it proposed to raise not less than
approximately HK$172 million after expenses (assuming no Option is granted and the conversion
rights under the Convertible Notes are not exercised on or before the Record Date) and not more

App
App
R.2.

– 11 –
LETTER FROM THE BOARD

than approximately HK$304 million after expenses (assuming all the Options are granted and fully
exercised and full conversion of the Convertible Notes is completed on or before the Record Date)
by way of the Rights Issue of not less than 892,906,512 Rights Shares and not more than
1,566,652,448 Rights Shares to the Qualifying Shareholders at a price of HK$0.2 per Rights Share
on the basis of one Rights Share for every two existing Shares held on the Record Date. The
Rights Issue is only available to the Qualifying Shareholders and is fully underwritten by the
Underwriter.
The purpose of this Prospectus is to provide you further information in relation to the
Rights Issue, certain financial and other information in respect of the Group.
II. RIGHTS ISSUE

1. Issue statistics
Basis of Rights Issue : one Rights Share for every two existing Shares held
on the Record Date
Number of Shares : 1,785,813,024 Shares as at the Latest Practicable
in issue Date (Note)
Number of : 892,906,512 Rights Shares, representing approximately
Rights Shares 50% of the existing issued share capital of the
Company and 33.3% of the enlarged issued share
capital of the Company upon the completion of the
Rights Issue
Subscription price per : HK$0.2 per Rights Share with nominal value of
Rights Share HK$0.1 each
Underwriter : Chung Nam Securities Limited, which is an
independent third party not connected with the
Directors, chief executive or substantial Shareholders
of the Company or its subsidiaries or any of their
respective associates
Note:
As at the Latest Practicable Date, there are (i) Options to subscribe up to an aggregate of 147,491,872
Shares under the share option scheme of the Company adopted on 6 August 2007 based on the scheme
mandate limit available to the Company and (ii) Convertible Notes convertible into 1,200,000,000 Shares
(based on the conversion price HK$0.5) outstanding. Save for the Options and the Convertible Notes,
there were no outstanding options, warrants or securities convertible or exchangeable into Shares as at the
Latest Practicable Date.
App
App

– 12 –
LETTER FROM THE BOARD

2. Qualifying Shareholders
The Company will send the Prospectus, provisional allotment letters and forms of
application for excess Rights Shares to Qualifying Shareholders only.
To qualify for the Rights Issue, a Shareholder must on the Record Date:
(i) be registered as a member of the Company; and
(ii) not be a Non-Qualifying Shareholder.
In order to be registered as a member of the Company on the Record Date, Shareholders
must lodge any transfer of Shares (together with the relevant share certificate(s)) with the
Registrar, on or before 4:00 p.m. (Hong Kong time) on 21 December 2007.
3. Terms of the Rights Issue
(1) Subscription price
The subscription price for the Right Shares is HK$0.2 per Rights Share and is
payable in full when a Qualifying Shareholder accepts the relevant provisional
allotment of Rights Shares or applies for excess Rights Shares or when a transferee
of nil-paid Rights Shares applies for the Rights Shares.
The subscription price of HK$0.2 per Rights Share was arrived at after arm’s
length negotiations between the Company and the Underwriter with reference to
recent closing prices of the Shares on the Stock Exchange and represents:
(i) a discount of approximately 45.95% to the closing price of HK$0.37 per
Share as quoted on the Stock Exchange on 30 November 2007;
(ii) a discount of approximately 36.16% to the theoretical ex-rights price of
HK$0.3133 per Share based on the closing price of HK$0.37 per Share
as quoted on the Stock Exchange on 30 November 2007; and
(iii) a discount of approximately 51.57% to the average closing price of
HK$0.413 per Share as quoted on the Stock Exchange for the last 10
trading days up to and including 30 November 2007.

– 13 –
LETTER FROM THE BOARD

The Directors (including the independent non-executive Directors) consider
that the discount of the subscription price of the Rights Share to closing price of the
Shares on 30 November 2007 is reasonable on the basis that the terms of the Rights
Issue (including the price) are arrived at after arm’s length negotiation with the
Underwriter and that it is a general market practice to issue rights shares at a discount
to the market price of the Shares. The Directors consider that the discount will
encourage existing Shareholders to take up their entitlements, so as to share the
potential growth of the Company.
(2) Basis of provisional allotments
One Rights Share for every two existing Shares held by a Qualifying Shareholder
on the Record Date.
(3) Status of the Rights Shares
When fully paid, issued and allotted, the Rights Shares will rank pari passu in
all respects with the then existing Shares. Holders of fully-paid Rights Shares will be
entitled to receive all future dividends and distributions which are declared, made or
paid after the date of issue and allotment of the fully-paid Rights Shares.
Dealings in nil-paid and fully-paid Rights Shares will be subject to the payment
of stamp duty in Hong Kong. The board lot of nil-paid rights is same as board lot of
underlying rights, i.e. 2,000.
(4) Rights of Non-Qualifying Shareholders
The Prospectus Documents will not be registered or filed under the applicable
securities or equivalent legislation of any jurisdictions other than Hong Kong. Based
on the register of members of the Company, there were four Overseas Shareholders
with registered addresses in three jurisdictions outside Hong Kong as at the Record
Date. Pursuant to Rule 13.36(2)(a) of the Listing Rules, the Board has made enquiries
with its legal advisers in these three jurisdictions as to whether there is any legal
restriction under the applicable securities legislation of the relevant jurisdiction or
requirement of any relevant regulatory body or stock exchange with respect to the
offer of Rights Shares to such Overseas Shareholders.
App
App
(7, 1
App

– 14 –
LETTER FROM THE BOARD

The Company has been advised by its legal advisers on the laws of Australia
that either (i) the Prospectus Documents will be required to be registered or filed with
or subject to approval by the relevant regulatory authorities in Australia; or (ii) the
Company would need to take additional steps to comply with the regulatory
requirements of the relevant regulatory authorities in Australia. Therefore, the Company
would be required to comply with the relevant laws and regulations if the Rights
Issue is to be offered to the Overseas Shareholder with a registered address in Australia.
Having considered the circumstances, the Directors are of the view that it is not
expedient to extend the Rights Issue to such Overseas Shareholders with a registered
address in Australia taking into consideration that the time and costs involved in
complying with the legal requirements of Australia will outweigh the possible benefits
to the relevant Overseas Shareholder and the Company. Thus, the Rights Issue would
not be extended to the Overseas Shareholder in Australia. The Company would send
this Prospectus, for information only, to such Overseas Shareholder with a registered
address in Australia but will not send the provisional allotment letter and excess
application form to them.
The Company has also been advised by its legal advisers on the laws of Taiwan
and Sweden that either (i) the Company is not subject to the legal restriction under
the applicable legislation of the relevant jurisdictions or requirement of the relevant
regulatory body or stock exchange with respect to the offer of the Rights Issue to the
Overseas Shareholders in the relevant jurisdictions; or (ii) the Company would be
exempt from obtaining approval from, and/or registration of the Prospectus Documents
with, the relevant regulatory authorities under the applicable laws and regulations of
the relevant jurisdictions since the Company would meet the relevant requirements
for exemption under the relevant jurisdictions. Based on the advice of the Company’s
legal advisers on the laws of Taiwan and Sweden, the Directors believe that the
Prospectus Documents would not be required to be registered under the relevant laws
and regulations of Taiwan and Sweden and may be despatched to the Overseas
Shareholders with registered addresses in Taiwan and Sweden without any restrictions.
In view of this, the Directors have decided to extend the Rights Issue to the Overseas
Shareholders with registered addresses in Taiwan and Sweden and such Overseas
Shareholders, together with the Shareholders with registered addresses in Hong Kong,
are Qualifying Shareholders. The Company will send the Prospectus Documents to
such Qualifying Shareholders.

– 15 –
LETTER FROM THE BOARD

The Company will make arrangements for the Rights Shares, which would
otherwise have been provisionally allotted to any Non-Qualifying Shareholders, to be
sold in the market in their nil-paid form as soon as practicable after dealing in the
nil-paid Rights Shares commences, if a premium (net of expenses) can be obtained.
The proceeds of each sale, less expenses, of HK$100 or more will be paid to Non-
Qualifying Shareholders in Hong Kong dollars pro rata to their respective shareholding
as soon as possible. The Company will retain individual amounts of less than HK$100
for its own benefits.
(5) Fractional entitlements to Rights Shares
Fractional entitlements to Rights Shares will not be provisionally allotted and
will be rounded down to the nearest whole number. Rights Shares representing the
aggregate of fractions of Rights Shares (rounded down to the nearest whole number)
will be provisionally allotted to a person nominated by the Company and, if a premium
of HK$100, net of expense, can be obtained, will be sold by the Company or the
person so nominated and the net proceeds of sale will be retained by the Company for
its own benefit. Any unsold fractions of Rights Shares will be available for excess
application.
(6) Procedure for acceptance or transfer
A provisional allotment letter is enclosed with this Prospectus for Qualifying
Shareholders which entitles Qualifying Shareholders to subscribe for the number of
Rights Shares shown therein. If Qualifying Shareholders wish to exercise their rights
to subscribe for all the Rights Shares specified in the enclosed provisional allotment
letter, Qualifying Shareholders must lodge the provisional allotment letter in
accordance with the instructions printed thereon, together with a remittance for the
full amount payable on acceptance, with the Registrar in Hong Kong, Tricor Tengis
Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong
by not later than 4:00 p.m. on Tuesday, 22 January 2008. All remittances must be
made in Hong Kong dollars. Cheques must be drawn on an account with, and cashier’s
orders must be issued by, a bank in Hong Kong and made payable to “Forefront
Group Limited – Provisional Allotment Account” and crossed “Account Payee Only”.
App

– 16 –
LETTER FROM THE BOARD

It should be noted that unless the provisional allotment letter, together with the
appropriate remittance, has been lodged with the Registrar by 4:00 p.m. on Tuesday,
22 January 2008, whether by the original allottee or any person to whom the rights
have been validly transferred, the relevant provisional allotment and all rights
thereunder will be deemed to have been declined and will be cancelled.
The provisional allotment letter contains the full information regarding the
procedure to be followed if Qualifying Shareholders wish to accept only part of their
provisional allotment or if they wish to renounce all or part of their provisional
allotment.
If Qualifying Shareholders wish to accept only part of their provisional allotment
or transfer a part of their rights to subscribe for the Rights Shares provisionally
allotted, or to transfer their rights to more than one person, the entire provisional
allotment letter must be surrendered and lodged for cancellation by not later than
4:00 p.m. on Monday, 14 January 2008 to the Registrar who will cancel the original
provisional allotment letter and issue new provisional allotment letters in the
denominations required.
All cheques and cashier’s orders will be presented for payment immediately
following receipt and all interest earned on such monies shall be retained for the
benefit of the Company. Any provisional allotment letter in respect of which the
accompanying cheque is dishonoured on first presentation is liable to be rejected, and
in that event the provisional allotment and all rights thereunder will be deemed to
have been declined and will be cancelled.
If the Underwriter exercises the right of termination to terminate its obligations
under the Underwriting Agreement at any time before 4:00 p.m. on the second Business
Day after the Acceptance Date, and/or if the conditions of the Rights Issue (summarized
in the section headed “Conditions of the Rights Issue” below) are not fulfilled or
waived by 31 January 2008, the monies received in respect of acceptances of the
Rights Shares will be returned to the Qualifying Shareholders or such other persons
to whom the Rights Shares in their nil-paid form shall have been validly transferred
or, in the case of joint acceptances, to the first-named person without interest, by
means of cheques despatched in the ordinary post at the risk of such Qualifying
Shareholders or such other persons on or before Tuesday, 29 January 2008.

– 17 –
LETTER FROM THE BOARD

(7) Application for excess Rights Shares
Qualifying Shareholders may apply for any unsold entitlements, and any Rights
Shares provisionally allotted but not accepted.
Application may be made by completing the forms of application for excess
Rights Shares and lodging the same with a separate remittance for the excess Rights
Shares. The Board will allocate the excess Rights Shares at its discretion with reference
to the level of acceptance of the Rights Shares and the number of excess Rights
Shares available on a fair and reasonable basis on the following principles:
(1) preference will be given to applications for topping-up odd-lot holdings
to whole-lot holdings; and
(2) subject to availability of excess Rights Shares after allocation under
principle (1) above, the excess Rights Shares will be allocated to
Qualifying Shareholders based on a sliding scale with reference to the
number of the excess Rights Shares applied by them (i.e. Qualifying
Shareholders applying for smaller number of Rights Shares are allocated
with a higher percentage of successful application but will receive less
number of Rights Shares; whereas Qualifying Shareholders applying for
larger number of Rights Shares are allocated with a smaller percentage
of successful application but will receive higher number of Rights Shares)
and with board lots allocations to be made on best effort’s basis.
For Qualifying Shareholders fail to lodge the provisional allotment letter and
lodge excess application form only, their applications on excess Rights Shares will be
treated on the same principles of (1) and (2) stated above. Accordingly, they will not
be allotted with their entitled shares under provisional allotment letter.
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. Accordingly, Shareholders should note that the aforesaid
arrangement in relation to the top-up of odd lots for allocation of excess Rights
Shares will not be extended to beneficial owners individually. Investors with their
Shares held by a nominee company are advised to consider whether they would like
to arrange for the registration of the relevant Shares in the name of the beneficial
owner(s) prior to the Record Date.
The Directors consider that the basis of allocation as set out above is fair and
reasonable, as Qualifying Shareholders applying for smaller number of Rights Shares
will receive a smaller number of Rights Shares whereas Qualifying Shareholders
applying for larger number of Rights Shares will receive a larger number of Rights
Shares.
R7.2

App

– 18 –
LETTER FROM THE BOARD

For Shareholders whose Shares are held by their nominee(s) and would like to
have their names registered on the register of members of the Company, they must
lodge all necessary documents with the Registrar for completion of the relevant
registration by 4:00 p.m. on 21 December 2007.
(8) Share certificates
Subject to the fulfillment of the conditions of the Rights Issue, certificates for
all fully-paid Rights Shares are expected to be posted to those entitled thereto by
ordinary mail at their own risk on or before 29 January 2008.
You will receive one share certificate for all the Rights Shares issued to you.
(9) Conditions of the Rights Issue
The Right Issue is conditional upon the following conditions being fulfilled:
(i) the signing by or on behalf of all of the Directors of one printed copy of
each of the Prospectus Documents and the certification by all Directors
(or by their agents duly authorised in writing) of two copies of each of
the Prospectus Documents;
(ii) the delivery of one such signed copy of each of the Prospectus Documents
to the Underwriter;
(iii) the delivery to the Stock Exchange and filing and registration with the
Registrar of Companies in Hong Kong of the Prospectus Documents;
(iv) the posting of copies of the Prospectus Documents to the Qualifying
Shareholders;
(v) compliance by the Company with a certain of its obligations under the
terms of the Underwriting Agreement;
(vi) the Listing Committee of the Stock Exchange (a) agreeing to grant the
listing of, and permission to deal in, the Rights Shares in their nil-paid
and fully-paid forms either unconditionally or subject to such conditions
which the Underwriter in their reasonable opinion accept and the
subsequent satisfaction of such conditions (if any); and (b) not having
withdrawn or revoked such listing and permission on or before 10:00 p.m.
on the Settlement Date.
In the event that the conditions above have not been satisfied and/or waived in
whole or in part by the Underwriter on or before 31 January 2008, all liabilities of the
parties hereto shall cease and determine and no party shall have any claim against the
other parties save for any antecedent breach of the Underwriting Agreement.
App

– 19 –
LETTER FROM THE BOARD

4. Underwriting arrangement
The parties have entered into the Underwriting Agreement on 3 December 2007. The
details of the Underwriting Agreement are set out below:
(1) Underwriting Agreement
Date : 3 December 2007
Parties : the Company and the Underwriter
Number of : 892,906,512 Rights Shares, being all the Rights
Rights Shares Shares
underwritten
Commission : 2.5% of the product of the subscription price and
the number of Underwritten Shares, the Directors
consider that such rate is fair and reasonable and
was determined after arm’s length negotiations
between the Company and the Underwriter
(2) Termination of the Underwriting Agreement
The Underwriter shall have the right to terminate the arrangements set out in
the Underwriting Agreement by notice in writing given to the Company at any time
prior to 4:00 p.m. on the second Business Day after the Acceptance Date, if:
(i) the occurrence of the following events would, in the reasonable opinion
of the Underwriter, materially and adversely affect the business, financial
or trading position or prospects of the Group as a whole or otherwise
makes it inexpedient or inadvisable for the Company or the Underwriter
to proceed with the Rights Issue:
(a) the introduction of any new law or regulation or any change in
existing law or regulation (or the judicial interpretation thereof)
or other occurrence of any nature whatsoever;
R7.1

– 20 –
LETTER FROM THE BOARD

(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 of
the Underwriting Agreement) 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
(c) the occurrence of any change in market conditions or combination
of circumstances in Hong Kong (including without limitation
suspension or material restriction on trading in securities);
(ii) any change occurs in the circumstances of the Company or any member
of the Group which would materially and adversely affect the prospects
of the Group as a whole;
(iii) the Company commits any breach of or omits to observe any of the
obligations or undertakings expressed to be assumed by it under the
Underwriting Agreement;
(iv) the Underwriter shall receive notification pursuant to the terms of the
Underwriting Agreement or shall otherwise become aware of, the fact
that any of the representations or warranties contained in the Underwriting
Agreement was, when given, untrue or inaccurate or would in any respect
be untrue or inaccurate if repeated as provided in the Underwriting
Agreement and the Underwriter shall in its reasonable opinion determine
that any such untrue representation or warranty represents or is likely to
represent a material and adverse change in the business, financial or
trading position or prospects of the Group as a whole or is otherwise
likely to have a material and adverse effect on the Rights Issue; or
(v) the Company shall, after a certain matter or event referred to in the
Underwriting Agreement has occurred or come to the attention of the
Underwriter, fail promptly to send out any announcement or circular
(after the despatch of the Prospectus Documents), in such manner (and
as appropriate with such contents) as the Underwriter may reasonably
request for the purpose of preventing the creation of a false market in
the securities of the Company.

– 21 –
LETTER FROM THE BOARD

(3) Effects on the shareholding structure
The following is the shareholding structure of the Company immediately before
and after completion of the Rights Issue (assuming no Option is granted and exercised
and the conversion rights under the Convertible Notes are not exercised on or before
Completion of the Rights Issue):
Immediately after
completion of the Rights Issue
and assuming none of Immediately after
the Directors and the completion of the Rights Issue
public Shareholders will and assuming all of
take up the Rights Shares and the Directors and the
Immediately before the Underwriter takes up its public Shareholders will
completion of the Rights Issue underwriting commitment take up the Rights Shares
approximately approximately approximately
Shares % Share % Shares %
Directors (Note 1) 133,347,736 7.47% 133,347,736 4.98% 200,021,604 7.47%
Willie International
Holdings Limited
(Note 2) 150,630,000 8.43% 150,630,000 5.62% 225,945,000 8.43%
China Railway Scientific
Technology
Development Company
(Note 3) 140,000,000 7.84% 140,000,000 5.23% 210,000,000 7.84%
Scania AB (publ)
(Note 4) 98,204,000 5.50% 98,204,000 3.67% 147,306,000 5.50%
Heritage International
Holdings Limited
(Note 5) 90,832,000 5.09% 90,832,000 3.39% 136,248,000 5.09%
Underwriter (note 6) 0 0.00% 892,906,512 33.33% 0 0.00%
Public Shareholders 1,172,799,288 65.67% 1,172,799,288 43.78% 1,759,198,932 65.67%
Total 1,785,813,024 100.00% 2,678,719,536 100.00% 2,678,719,536 100.00%
Notes:
1. This excludes 150,000 Shares held by Ms. Warphon Suwannahong, the spouse of Mr.
Louis Wen, an executive Director of the Company.
2. Willie International Holdings Limited (Stock code: 273), a company listed on the Stock
Exchange, is interested in the share capital of the Company indirectly through its wholly-
owned subsidiary, Pearl Decade Limited.
3. China Railway Investments Group (Hong Kong) Limited0
"!is wholly-owned by China Railway Investments Group Limited
"!which in turn wholly-owned by China Railway Scientific Technology
Development Company!.

– 22 –
LETTER FROM THE BOARD

4. The issued share capital of Scania Trade Development AB is wholly-owned by Scania
CV AB (publ) which in turn, is wholly-owned by Scania AB (publ).
5. Dollar Group Limited is wholly-owned by Coupeville Limited which in turn is wholly-
owned by Heritage International Holdings Limited.
6. The Underwriter has undertaken that (i) if all the Rights Shares are taken by the
Underwriter pursuant to the terms of the Underwriting Agreement, the Underwriter will
on sell such Shares to not less than 6 subscribers who are independent of the Company
and its connected persons; (ii) it will not place the untaken Shares to any single person or
entity to the extent that such person or entity would become a substantial shareholder of
the Company for the purpose of the Listing Rules; (iii) it will not become a substantial
shareholder of the Company as a result of the Rights Issue.
5. Warning of the risks of dealing in Shares and Rights Shares
Existing Shares are expected to be dealt in on an ex-rights basis from 20 December
2007.

Dealings in the Rights Shares in nil-paid form are expected to take place from 10
January 2008 to 17 January 2008 (both days inclusive). If the Underwriting Agreement
is terminated (see the section headed “Termination of the Underwriting Agreement”
above), or if the conditions of the Rights Issue (see the section headed “Conditions of
the Rights Issue” above) are not fulfilled or waived, the Rights Issue will not proceed.
Any buying or selling of the Shares from now up to the date on which all such
conditions are fulfilled, and any buying or selling of nil-paid Rights Shares, are at
investors’ own risk.
If in any doubt, investors should consider obtaining professional advice.
6. Listing and Dealings
The Company has applied to the Listing Committee of the Stock Exchange for the
listing of, and permission to deal in, the Rights Shares in both their nil-paid and fully-paid
forms.
R7.1

App
9(1)

– 23 –
LETTER FROM THE BOARD

The Shares are listed on the Stock Exchange and none of the securities of the Company
are listed or dealt in or on any other stock exchange and no such listing or permission to
deal is being or proposed to be sought. The Company has no debt securities listed or dealt in
or on any stock exchange and no such listing or permission to deal is being or proposed to
be sought.
Subject to the granting of the listing of, and permission to deal in, the Rights Shares
in both their nil-paid and fully-paid forms on the Stock Exchange, the Rights Shares in both
their nil-paid and fully-paid forms 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 Rights Shares in both their nil-paid and fully-paid forms respectively or such
other date as 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.
All necessary arrangements will be made to enable the Rights Shares in both their
nil-paid and fully-paid forms to be admitted to CCASS. You should seek the advice of your
licensed securities dealer or other professional advisers for details of those settlement
arrangements and how such arrangements will affect your rights and interests. The first day
of dealings in the Rights Shares in their fully-paid form is expected to commence on
Thursday, 31 January 2008.
Dealing in the Rights Shares, in both their nil-paid and fully-paid forms, will be
subject to the payment of stamp duty in Hong Kong.
7. Taxation
Qualifying Shareholders are recommended to consult their professional advisors if
they are in any doubt as to the tax implications of the holding or disposal of, or dealing in
the Rights Shares in both their nil-paid and fully-paid forms and, as regards the Non-
Qualifying Shareholders, their receipt of the net proceeds of sale of the Rights Shares
otherwise falling to be issued to them under the Rights Issue. It is emphasised that none of
the Company, its Directors or any other parties involved in the Rights Issue accepts
responsibility for any tax effects or liabilities of holders of the Rights Shares resulting from
the purchase, holding or disposal of, or dealing in the Rights Shares in both their nil-paid
and fully-paid forms.
App
App

– 24 –
LETTER FROM THE BOARD

8. Reasons for the Rights Issue and use of the proceeds
The Directors consider that it is prudent to finance the Group’s long-term growth by
long term funding, preferably in the form of equity which will not increase the Group’s
finance costs. Furthermore, the Directors consider that it is in the interest of the Company
to enlarge its capital base by way of the Rights Issue which will allow all Shareholders the
opportunity to participate in the growth of the Company.
Besides, the Board considers that in view of the volatile stock market conditions, the
Company should seize this chance to secure equity funding for the shareholders and the
Company as a whole because the underwriter has underwritten the Rights Issue. The Rights
Issue allows the Company to broaden shareholders’ base without diluting their corresponding
shareholdings and allows the shareholder to participate in the long term growth of the
Company at a lower price than the current market level.
As per 2007 interim report and the subsequent announcements made by the Company,
the Company has different businesses in operation which include trading and distribution of
Scania motor trucks, coaches and vehicle accessories, investing in development, management
and operation of an e-ticketing system in PRC, selling and distribution of Nissan motors,
the operation of the Nissan 4S shops, provision of heavy motor vehicle repair and
maintenances services in PRC, property investments. Each operation may have different
capital requirements depending on the market conditions and the status of business
development during the financial year. The Company can utilize available cash in hand
immediately to expand its business as and when the opportunity arises.
The net proceeds from the Rights Issue is expected to be approximately HK$172
million, which will be used by the Company for the reduction of the borrowing and other
investment purposes. As at the Latest Practicable Date, the Company had total assets of
approximately HK$1 billion and the total liabilities of approximately HK$620 million,
which results in total equity of approximately HK$380 million. The Company would like to
use the net proceeds from the Rights Issue to reduce its liability and improve its debt to
equity ratio so as to strengthen the financial position of the Company in the long run. As at
the Latest Practicable Date, the Company has not identified any specific investment
opportunities.
The total cash and cash equivalents is HK$828.90 million before the completion of
the Rights Issue and will increase to approximately HK$1 billion after the completion of the
Rights Issue.
R.7.

– 25 –
LETTER FROM THE BOARD

9. Capital-raising activities during past 12 months
Apart from the capital raising activities mentioned below, the Company has not carried
out other capital raising activities during the 12 months immediately preceding the Latest
Practicable Date. The net proceeds of approximately HK$962 million raised by the Company
from the capital raising activities during the 12 months immediately preceding the Latest
Practicable Date are summarized below, which is in line with the intended use of proceeds
as disclosed in the relevant announcements of the Company:
Date of Capital Raising Net Proceeds Intended use of
Announcement Activity Raised proceeds Actual Use of Proceeds
(HK$)
16 February 2007 Placing of 488,447,736 HK$98 million HK$20 million HK$20 million
Shares to Wealth – develop service – not yet utilized as at the Latest
Style Limited centres & exhibition Practicable Date and is
halls in the PRC expected to be used in
developing service centers and
exhibition halls in the PRC
HK$34 million HK$34 million
– develop auto-leasing – not yet utilized as at the Latest
business in the PRC Practicable Date and is
expected to be used in
developing auto-leasing
business in the PRC
HK$44 million HK$19.7 million
– general working – general working capital
capital
HK$24.3 million
– not yet utilized as at the Latest
Practicable Date and is expected
to be used as general
working capital
25 May 2007 Placing and subscription HK$48 million As general working capital HK$2.375 million
of 191,548,000 Shares and approximately – investment cost to complete
HK$2.5 million as the the incorporation of a
remaining balance of subsidiary in Shenzhen
investment cost to
complete the HK$ 45.625 million
incorporation of a – not yet utilized as at the Latest
subsidiary in Shenzhen Practicable Date and
expected to be used as
general working capital
App

– 26 –
LETTER FROM THE BOARD

3 July 2007 Placing of 229,856,000 HK$85 million As general working capital HK$ 29.1 million
Shares and other possible – investment in
investments in the future acquisition of properties
HK$1.3 million
– related expense for the
acquisition of properties
HK$54.6 million
– not yet utilized as at the Latest
Practicable Date and is
expected to be used as other
possible investments in the future
10 July 2007 Placing of convertible HK$731 million For the proposed HK$80 million
notes in a principal acquisition of a – investment of Natural Harvest
amount of HK$150 company incorporated Investments Limited
million on a fully in British Virgin Islands (e-ticketing project)
underwritten basis and and as general
placing of convertible working capital HK$2.5 million
notes in a principal – related expense for
amount up to HK$600 (e-ticketing project)
million on a best
effort basis (completed HK$26.7 million
on 16 August 2007) – investment in Golden Fame
International Investments
Group Ltd.
HK$ 20 million
– investment in Leapfly Limited
HK$601.8 million
– not yet utilized as at the Latest
Practicable Date and
expected to be used as
general working capital
Total 962 million
Date of Capital Raising Net Proceeds Intended use of
Announcement Activity Raised proceeds Actual Use of Proceeds
(HK$)

– 27 –
LETTER FROM THE BOARD

10. Business review and prospects
The Company resumed the trading of its shares in the Stock Exchange of Hong Kong
Limited on 18 April 2007 since the suspension of its trading from 14 May 2004.
Since the resumption of trading of its shares and the aboard of the new management,
the Company carried out a series of corporate exercises to increase the Group’s general
working capital and ability to invest on various projects for the diversification of the Group.
The Company has changed its name from “Forefront International Holdings Limited”
to “Forefront Group Limited” and adopt “E"!” as its new Chinese name for
identification purpose in order to align the Company’s objective to further diversify its
motor vehicle business as well as other business for the long term growth of the Group.
In the past 12 months, the Company has raised HK$962 million. As at the Latest
Practicable Date, the Company has unaudited total assets of approximately HK$1 billion
and unaudited total liabilities of approximately HK$620 million, which results in unaudited
total equity of approximately HK$380 million. The main business of the Company in the
past was trading and distribution of Scania motor trucks, coaches and vehicle accessories.
Despite management spending substantial effort and resources to increase the efficiency and
performance of the distribution business of Scania motors and trucks, the profitability and
the return on equity were low and the Group recorded unaudited loss of HK$6.5 million for
the six months period ended 30 June 2007. Therefore, the Company started to diversify its
business in order to improve profitability and long-term growth. Currently, the Company
has different businesses in operations which includes, investing in development, management
and operation of an e-ticketing system in PRC, selling and distribution of Nissan motors,
the operation of the Nissan 4S shops, provision of heavy motor vehicle repair and
maintenances services in PRC and property investments. With the immediately available
cash in hand, the Company can expand its business as and when the opportunity arises.
Besides, the Company expects to use the funds raised from this Right Issue to reduce its
debt so as to improve its debt to equity ratio and financial position and to expand its
business as and when the opportunities arises.
III. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this
Prospectus.
Yours faithfully,
By order of the Board of
FOREFRONT GROUP LIMITED

Yeung Ming Kwong
Executive Director
App

– 28 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

JE
1. SUMMARY OF FINANCIAL STATEMENTS

1.1 Financial Summary
Summary of the consolidated results and of the assets and liabilities of the Group for
the period from 1 January 2007 to 30 June 2007 and the years ended 31 December 2006,
2005 and 2004 is set out below:
RESULTS

Unaudited
Six months
ended Audited
30 June Years ended 31 December
2007 2006 2005 2004

HK$’000 HK$’000 HK$’000 HK$’000
Turnover 39,916 94,987 137,979 176,896
Cost of sales and services (32,729) (79,414) (117,957) (163,047)
Gross profit 7,187 15,573 20,022 13,849
Other income 2,185 1,771 16,666 2,865
Distribution and selling expenses (1,446) (2,872) (1,156) (2,319)
General and administrative expenses (22,862) (38,792) (149,706) (67,980)
Changes in fair value of financial
assets at fair value through
profit or loss (5,835) –––
Loss from operations (20,771) (24,320) (114,174) (53,585)
Finance costs (649) (432) (4,191) (1,775)
Loss before taxation (21,420) (24,752) (118,365) (55,360)
Taxation ––1,261 –
Loss for the year/period (21,420) (24,752) (117,104) (55,360)
Attributable to:
Equity holders of the parent (21,420) (24,752) (117,104) (55,360)
Minority interests ––––
(21,420) (24,752) (117,104) (55,360)
Dividend ––––
Loss per share – basic (HK cents) (3.2) (5.7) (26.9) (12.7)
App
(3a)

– 29 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

JE
ASSETS AND LIABILITIES

Unaudited
As at Audited
30 June As at 31 December
2007 2006 2005 2004

HK$’000 HK$’000 HK$’000 HK$’000
ASSETS AND LIABILITIES

Non-current assets
Property, plant and equipment 3,392 3,524 313 53,764
Land lease prepayment –––2,450
Interests in unconsolidated subsidiaries ––48,174 149,054
Amounts due from unconsolidated
subsidiaries –––1,130
Investment securities ––––
3,392 3,524 48,487 206,398

Current assets
Financial assets at fair value
through profit or loss 85,950 –––
Interests in unconsolidated
subsidiaries held for sale – 48,174 ––
Inventories 32,879 30,355 34,108 35,847
Trade and other receivables 15,661 18,414 66,266 68,801
Pledged deposits 558 558 1,474 –
Bank balances and deposits
held in a broker account 45,350 6,262 62,805 14,311
180,398 103,763 164,653 118,959

Current liabilities
Trade and other payables 19,464 30,089 29,913 26,598
Amounts due to unconsolidated
subsidiaries ––51,742 41,003
Amounts due to unconsolidated
subsidiaries held for sale – 52,539 ––
Current portion on interest-bearing
borrowings ––9,366 5,854
Zero coupon convertible bonds 72,710 –
Taxation –––1,536
19,464 82,628 163,731 74,991

– 30 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

JE
Net current assets 160,934 21,135 922 43,968
Total assets less current
liabilities 164,326 24,659 49,409 250,366
Non-current liabilities
Long-term interest-bearing borrowings –––9,756
Zero coupon convertible bonds 69,930
–––79,686
Net assets 164,326 24,659 49,409 170,680
Capital and reserves
Share capital 114,929 43,577 43,577 43,577
Reserves 49,397 (13,535) 5,832 127,103
Reserve attributable to interests in
unconsolidated subsidiaries
held for sale – (5,383) ––
Equity attributable to equity holders of
the parent 164,326 24,659 49,409 170,680
Minority interests ––––
Total equity 164,326 24,659 49,409 170,680
Unaudited
As at Audited
30 June As at 31 December
2007 2006 2005 2004

HK$’000 HK$’000 HK$’000 HK$’000

– 31 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

JE
1.2 Unaudited and audited financial statements
Set out below are the unaudited financial statements of the Group for the period from
1 January 2007 to 30 June 2007 as extracted from the interim report of the Company for the
period ended 30 June 2007 and the audited financial statements of the Group for the years
ended 31 December 2006, 2005 and 2004 as extracted from the 2006, 2005 and 2004 annual
reports of the Company. Reference to page numbers in the audited financial statements of
the Group is to the page numbers of the relevant annual report of the Company. The
Company’s auditor issued qualified opinions on the Company’s financial statements for
each of the three years ended 31 December 2006, 2005 and 2004.
CONSOLIDATED INCOME STATEMENT

Unaudited
Six months
ended Audited
30 June Years ended at 31 December
2007 2006 2005 2004

Note HK$’000 HK$’000 HK$’000 HK$’000
Turnover 3 39,916 94,987 137,979 176,896
Cost of sales and services (32,729) (79,414) (117,957) (163,047)
Gross profit 7,187 15,573 20,022 13,849
Other income 3 2,185 1,771 16,666 2,865
Distribution and selling expenses (1,446) (2,872) (1,156) (2,319)
General and administrative expenses (22,862) (38,792) (149,706) (67,980)
Changes in fair value of
financial assets at fair value
through profit or loss (5,835) –––
Loss from operations (20,771) (24,320) (114,174) (53,585)
Finance costs 4(i) (649) (432) (4,191) (1,775)
Loss before taxation 4 (21,420) (24,752) (118,365) (55,360)
Taxation 7 ––1,261 –
Loss for the period (21,420) (24,752) (117,104) (55,360)
Attributable to:
Equity holders of the parent (21,420) (24,752) (117,104) (55,360)
Minority interests ––––
(21,420) (24,752) (117,104) (55,360)
Dividend ––––
Loss per share – basic (HK cents) 9 (3.2) (5.7) (26.9) (12.7)

– 32 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

JE
CONSOLIDATED BALANCE SHEET

Unaudited
As at Audited
30 June As at 31 December
2007 2006 2005 2004

Note HK$’000 HK$’000 HK$’000 HK$’000
Non-current assets
Property, plant and equipment 10 3,392 3,524 313 53,764
Land lease prepayment –––2,450
Interests in unconsolidated
subsidiaries ––48,174 149,054
Amounts due from unconsolidated
subsidiaries 11 –––1,130
Investment securities 12 ––––
3,392 3,524 48,487 206,398

Current assets
Financial assets at fair value
through profit or loss 85,950 –––
Interests in unconsolidated
subsidiaries held for sale 11 – 48,174 ––
Inventories 14 32,879 30,355 34,108 35,847
Trade and other receivables 15 15,661 18,414 66,266 68,801
Pledged deposits 16 558 558 1,474 –
Bank balances and deposits
held in a broker account 45,350 6,262 62,805 14,311
180,398 103,763 164,653 118,959

Current liabilities
Trade and other payables 17 19,464 30,089 29,913 26,598
Amounts due to unconsolidated
subsidiaries 11 ––51,742 41,003
Amounts due to unconsolidated
subsidiaries held for sale 11 – 52,539 ––
Current portion on interest-bearing
borrowings 19 ––9,366 5,854
Zero coupon convertible bonds 20 72,710 –
Taxation –––1,536
19,464 82,628 163,731 74,991

Net current assets 160,934 21,135 922 43,968
Total assets less current
liabilities 164,326 24,659 49,409 250,366

– 33 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

JE
Non-current liabilities
Long-term interest-bearing
borrowings –––9,756
Zero coupon convertible bonds 69,930
–––79,686
Net assets 164,326 24,659 49,409 170,680
Capital and reserves
Share capital 22 114,929 43,577 43,577 43,577
Reserves 49,397 (13,535) 5,832 127,103
Reserve attributable to interests in
unconsolidated subsidiaries
held for sale – (5,383) ––
Equity attributable to equity
holders of the parent 164,326 24,659 49,409 170,680
Minority interests ––––
Total equity 164,326 24,659 49,409 170,680
Unaudited
As at Audited
30 June As at 31 December
2007 2006 2005 2004

Note HK$’000 HK$’000 HK$’000 HK$’000

– 34 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

JE
BALANCE SHEET

Audited
As at 31 December
2006 2005 2004

Note HK$’000 HK$’000 HK$’000
ASSETS AND LIABILITIES

Non-current assets
Interests in subsidiaries 13a 52,373 172,613 349,417
Investment securities 12 –––
52,373 172,613 349,417

Current assets
Interests in subsidiaries
held for sale 13b 40,389 ––
Other receivables 15 1,514 39,195 39,058
Pledged deposits 558 316 –
Bank balances and cash 211 17,608 340
42,672 57,119 39,398

Current liabilities
Other payables 17 7,528 3,039 4,393
Amounts due to subsidiaries 13c 32,713 97,296 128,207
Amounts due to subsidiaries
held for sale 13d 38,620 ––
Current portion on interest-bearing
borrowings 19 – 9,366 5,854
Zero coupon convertible bonds 20 – 72,710 –
78,861 182,411 138,454

Net current liabilities (36,189) (125,292) (99,056)
Total assets less current liabilities 16,184 47,321 250,361
Non-current liabilities:
Long-term interest-bearing borrowings ––9,756
Zero coupon convertible bonds 69,930
––79,686
NET ASSETS 16,184 47,321 170,675

Capital and Reserves
Share capital 22 43,577 43,577 43,577
Reserves 24 (27,393) 3,744 127,098
TOTAL EQUITY 16,184 47,321 170,675

– 35 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

JE
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to equity holders of the parent
Capital Properties Cumulative
Issued Share Capital Redemption Revaluation Translation Accumulated Minority Total
Capital Premium Reserve Reserve Reserve Reserve Deficit Total Interests Equity
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 January 2004 44,170 243,800 10,482 580 3,197 (5,790) (62,874) 233,565 – 233,565
Translation adjustments –––––69 – 69 – 69
Surplus on revaluation of
properties ––––1,904 ––1,904 – 1,904
44,170 243,800 10,482 580 5,101 (5,721) (62,874) 235,538 – 235,538
Disposal of properties ––––(596) ––(596) – (596)
Repurchase of shares (593) (8,309) – 593 ––(593) (8,902) – (8,902)
Loss for the year ––––––(55,360) (55,360) – (55,360)
At 31 December 2004 43,577 235,491 10,482 1,173 4,505 (5,721) (118,827) 170,680 – 170,680
At 1 January 2005 43,577 235,491 10,482 1,173 4,505 (5,721) (118,827) 170,680 – 170,680
Translation adjustments –––––338 – 338 – 338
Deficit on properties (4,505) ––(4,505) – (4,505)
Loss for the year ––––––(117,104) (117,104) – (117,104)
At 31 December 2005 43,577 235,491 10,482 1,173 – (5,383) (235,931) 49,409 – 49,409
At 1 January 2006 43,577 235,491 10,482 1,173 – (5,383) (235,931) 49,409 – 49,409
Translation adjustments –––– 2 – 2 – 2
Loss for the year ––(24,752) (24,752) – (24,752)
At 31 December 2006 43,577 235,491 10,482 1,173 – (5,381) (260,683) 24,659 – 24,659
(Note)
Note: Cumulative translation reserve included a debit amount of HK$5,383,000 which is attributable to interests
in unconsolidated subsidiaries held for sale and a credit amount of HK$2,000 which is attributable to
interests in a subsidiary incorporated in Mainland China.

– 36 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

JE
CONSOLIDATED CASH FLOW STATEMENT

Audited
Year ended 31 December
2006 2005 2004

HK$’000 HK$’000 HK$’000
Operating activities
Cash (used in)/generated from operations (11,430) (8,199) 9,958
Finance Costs (432) (1,411) (1,775)
Overseas taxation paid – 37 (7)
Net cash (used in)/generated from
operating activities (11,862) (9,573) 8,176
Investing activities
Proceeds from disposal of property,
plant and equipment 102 52,667 5,161
Proceeds from disposal of
land lease prepayment – 1,500 –
Interest received 594 167 15
Proceeds on disposal of interest
in a subsidiary – 7,370 –
Purchase of property, plant and equipment (3,867) (270) (1,333)
Increase in amounts due from
unconsolidated subsidiaries ––(1,130)
Net cash (used in)/generated
from investing activities (3,171) 61,434 2,713
Financing activities
Repayment of interest-bearing borrowings (9,366) (6,244) (186,079)
Redemption of zero coupon
convertible bonds (33,860) – (46,620)
Repurchase of shares ––(8,902)
Increase in amounts due to unconsolidated
subsidiaries (held for sale) 797 4,393 100,666
Proceeds from issue of
zero coupon convertible bonds ––77,700
New loans from bank and financial
institutions ––53,833
Net cash used in financing activities (42,429) (1,851) (9,402)
Effect on cumulative translation
adjustments 3 (42) 61

– 37 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

JE
Net (decrease)/increase in cash and
cash equivalents (57,459) 49,968 1,548
Cash and cash equivalents
at beginning of year 64,279 14,311 52,447
Cash and cash equivalents attributable
to unconsolidated subsidiaries
at beginning of year ––(39,684)
Cash and cash equivalents at balance
sheet date, represented by bank
balances and cash and
pledged deposits 6,820 64,279 14,311
Audited
Year ended 31 December
2006 2005 2004

HK$’000 HK$’000 HK$’000

– 38 –
APPENDIX I FINANCIAL AND OTHER INFORMATION
NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2006
1. Corporation information
The activities and particulars of the Company and its subsidiaries (hereinafter,
collectively referred to as the “Group”) are set out in the corporation information and
report of the directors in the 2006 annual report.
2. Principal accounting policies
Basis of preparation
These financial statements have been prepared in accordance with Hong Kong
Financial Reporting Standards (“HKFRSs”) and Hong Kong Accounting Standards
(“HKASs”) issued by the Hong Kong Institute of Certified Public Accountants
(“HKICPA”), accounting principles generally accepted in Hong Kong and the
disclosure requirements of the Hong Kong Companies Ordinance except for the
exclusion of consolidation of Taiwan Subsidiaries as set out below. The measurement
basis used in the preparation of these financial statements is historical cost.
Taiwan Subsidiaries
As detailed in the Company’s previous Interim Reports, Annual Reports and
certain announcements, the Group was involved in a dispute concerning control over
its subsidiaries operation in Taiwan in early 2005, namely Forefront International
Automotive Limited (“FIAL”), Sunshine Credit Limited (“SSC”) and U-Drive Smart
Card Company Limited (collectively referred to as “Taiwan Subsidiaries”). Certain
former members of the Board actively obstructed the Group’s legitimate exercise of
control over the Taiwan Subsidiaries resulting in the Group losing control over the
Taiwan Subsidiaries until June 2005. After regaining control of the Taiwan Subsidiaries
in June 2005, it became apparent that the operating assets of the Taiwan Subsidiaries
had been used illegally by the former management of the Taiwan Subsidiaries without
proper authorisation. Multiple civil and criminal litigation proceedings were initiated
against the former management of the Taiwan Subsidiaries to recover the assets. The
books and records of the Taiwan Subsidiaries were found to be insufficient for the
preparation of financial statements and consolidation into the consolidated accounts
of the Group for the financial years ended 2004, 2005 and 2006. Accordingly, it is
not possible for the Group to ascertain the exact amount of assets and liabilities of
the Taiwan Subsidiaries at the balance sheet date of these financial statements.

– 39 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

As a result, the financial statements of the Taiwan Subsidiaries have not been
included in the consolidated financial statements of the Group as, in the opinion of
the directors, the inclusion of these financial statements may result in an inaccurate
picture of the Group’s financial position and performance for the year. Whilst the
directors consider that the exclusion of these subsidiaries is the best way of presenting
the Group’s financial position and results for the year in the circumstances, the reason
for the exclusion is not one of the reasons for exclusion provided for in Hong Kong
Accounting Standard 27 “Consolidated and separate financial statements” issued by
the Hong Kong Institute of Certified Public Accountants (“HKAS 27”) and, in this
respect, the financial statements are not in compliance with HKAS 27. For this reason,
the Company’s auditors have disclaimed their opinion on the financial statements.
On 30 December 2006, the Company entered into a sales and purchase
agreement with Smeatons Development Limited, being an independent third party
purchaser, in respect of the disposal of the Taiwan Subsidiaries (“Disposal
Agreement”). The Disposal Agreement was approved by independent shareholders
on 30 March 2007 and completed on the same day. More information of the disposal
is set out in Note 32.
Impact of new HKFRSs and HKASs
At the date of authorisation of these financial statements, the HKICPA has
issued a number of accounting standards and interpretations that are not yet effective
for the current year. The directors anticipate that the adoption of these new HKFRSs
in the future would have no material impact on the results of the Group.
Basis of consolidation
The consolidated financial statements include the financial statements of the
Company and its subsidiaries made up to 31 December each year. All inter-company
transactions and balances have been eliminated on consolidation.
Subsidiaries
A subsidiary is an entity, in which the Company, directly or indirectly, has the
power to govern the financial and operating policies so as to obtain benefits from its
activities.
In the Company’s balance sheet, investment in subsidiaries is stated at cost less
accumulated impairment losses. The carrying amount of the investment is reduced to
its recoverable amount on an individual basis. The results of subsidiaries are accounted
for by the Company on the basis of dividends received and receivable.

– 40 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

Financial instruments
Financial assets and liabilities are recognised on the trade date basis, when the
Group becomes a party to the contractual provisions of the instruments. The
derecognition of a financial asset takes place when the Group’s contractual rights to
future cash flows from the financial asset expire or the Group transfers the contractual
rights to future cash flows to a third party. The Group derecognises financial liability
when, and only when the liability is extinguished.
Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their
carrying amount will be recovered through a sale transaction rather than through
continuing use. This condition is regarded as met only when the sale is highly probable
and the asset (or disposal group) is available for immediate sale in its present condition.
Management must be committed to the sale, which should be expected to qualify for
recognition as a completed sale within one year from the date of classification.
Non-current assets (and disposal groups) classified as held for sale are measured
at the lower of the assets’ previous carrying amount and fair value less costs to sell.
Bank borrowings
Bank borrowings are initially recognised at cost, being the fair value of the
consideration received, net of transaction costs incurred and are subsequently measured
at amortised cost using the effective interest method.
Trade receivables and payables
Trade receivables and payables are recognised at cost which approximates
their fair value, less provision for impairment. A provision for impairment of trade
receivables is established when there is objective evidence that the Group will not be
able to collect all the amounts due according to the original terms of the receivables.
The amount of the provision is the difference between the assets’ carrying amount
and the present value of estimated future cash flow, discounted at the effective interest
rate. The amount of provision is recognised in the income statement.

– 41 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and accumulated impairment losses.
The cost of an item of property, plant and equipment comprises its purchase
price and any directly attributable costs of bringing the asset to its working condition
and location for its intended use. Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, 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 repair and maintenance expenses are charged to the
income statement during the year in which they are incurred.
Depreciation is provided to write off the cost less accumulated impairment
losses of property, plant and equipment over their estimated useful lives from the
date on which they are available for use and after taking into account their estimated
residual value, using the straight-line method, at the following rates per annum:
Leasehold improvement 50%
Furniture and fixture 20%-50%
Motor vehicles 20%-33%
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost which
comprises all costs of purchase and, where applicable, costs of conversion and other
costs that have been incurred in bringing the inventories to their present location and
condition. For motor vehicles, cost is determined on the specific identification basis,
while for other inventories, cost is calculated using the weighted average method. Net
realisable value represents the estimated selling price in the ordinary course of business
less the estimated costs necessary to make the sale.
Impairment loss
At each balance sheet date, the Group reviews internal and external sources of
information to determine whether the carrying amounts of its property, plant and
equipment and investment in subsidiaries have suffered an impairment loss or
impairment loss previously recognised no longer exists or may be reduced. If any
such indication exists, the recoverable amount of the asset is estimated, based on the
higher of its fair value less costs to sell and value in use. Where it is not possible to
estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the smallest group of assets that generates cash flows
independently (i.e. a cash-generating unit).

– 42 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

If the recoverable amount of an asset or a cash-generating unit is estimated to
be less than its carrying amount, the carrying amount of the asset or cash-generating
unit is reduced to its recoverable amount. An impairment loss is recognised as an
expense and charged to the income statement immediately.
A reversal of impairment losses is limited to the carrying amount of the asset
or cash-generating unit that would have been determined had no impairment loss
been recognised in prior years. Reversal of impairment loss is recognised as income
immediately.
Provisions
Provisions are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation, and a reliable
estimate of the amount of obligation can be made. Expenditure for which a provision
has been recognised are charged against the related provision in the year in which the
expenditure is incurred. Provisions are reviewed at each balance sheet date and adjusted
to reflect the current best estimate. Where the effect of the time value of money is
material, the provision is stated at the present value of the expenditure expected to be
required to settle the obligation. Where the Group expects a provision to be reimbursed,
the reimbursement is recognised as a separate asset but only when the reimbursement
is virtually certain.
Revenue
Revenue is recognised when it is probable that the economic benefits will flow
to the Group and when the revenue can be measured reliably.
Sale of goods is recognised on transfer of risks and rewards of ownership,
which generally coincides with when goods are delivered to customers and title has
passed.
Service fee income is recognised when the services are rendered.

– 43 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

Foreign currencies
Items included in the financial statements of each of the Groups entities are
measured using currency of the primary economic environment in which the entity
operates (“the functional currency”). The consolidated financial statements are
presented in Hong Kong dollars, which is the Company’s functional and presentation
currency.
Transactions involving foreign currencies are translated into functional currency
at the rates of exchange prevailing on the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the balance sheet date are retranslated
at the rates prevailing on the balance sheet date. Translation differences are included
in the income statement.
On consolidation, the balance sheets of foreign operations denominated in
currencies other than Hong Kong dollars are translated at the rates of exchange ruling
at the balance sheet date while the income statement is translated at average rates for
the year. All exchange differences arising on consolidation are dealt with in through
the translation reserve.
Taxation
The charge for current income tax is based on the results for the year as
adjusted for items that are non-assessable or disallowed. It is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is provided, using the liability method, on all temporary differences
at the balance sheet date between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. However, if the timing difference 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 the accounting profit
nor taxable profit or loss, it is not accounted for.
The deferred tax liabilities and assets are measured at the tax rates that are
expected to apply to the period when the asset is recovered or the liability is settled,
based on tax rates and tax laws that have been enacted or substantively enacted at the
balance sheet date. Deferred tax assets are recognised to the extent that it is probable
that future taxable profit will be available against which the deductible temporary
differences, tax losses and credits can be utilised.

– 44 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

Cash equivalents
Cash equivalents in the consolidated cash flow statement represent short-term
highly liquid investments which are readily convertible into known amounts of cash
and which are subject to an insignificant risk of change in value, net of bank overdrafts.
Operating leasing
Rentals payable and receivable under operating leases are recognised as an
expense and revenue on the straight-line basis over the lease terms. Lease incentives
received are recognised in the income statement as an integral part of the net
consideration agreed for the use of the leased asset. Contingent rentals are recognised
as expenses in the accounting period in which they are incurred.
Related parties
A party is related to the Group if (a) directly, or indirectly through one or
more intermediaries, the party controls, is controlled by, or is under common control
with, the Group; or has an interest in the Group that gives it significant influence
over the Group; or has joint control over the Group; (b) the party is an associate of
the Group; (c) the party is a joint venture in which the Group is a venturer; (d) the
party is a member of the key management personnel of the Group or its parent; (e)
the party is a close member of the family of any individual referred to in (a) or (d);
(f) the party is an entity that is controlled, jointly controlled or significantly influenced
by or for which significant voting power in such entity resides with, directly or
indirectly, any individual referred to in (d) or (e); or (g) the party is a post-employment
benefit plan for the benefit of employees of the Group, or of any entity that is a
related party of the Group.
Critical accounting estimates and judgements
Estimates and judgements are currently evaluated and are based on historical
experience and other factors including expectations of future events that are believed
to be reasonable under the circumstances. Apart from information disclosed elsewhere
in these financial statements, the following summarise 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.

– 45 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

Allowance for inventories
The Group reviews an ageing analysis of inventories at each balance sheet
date, and make allowance for obsolete and slow-moving inventory items identified
that are no longer recoverable or suitable for use. The management estimates the net
realisable value for inventory based primarily on the latest invoice prices and current
market conditions. The Group carries out an inventory review on a product-by-product
basis at each balance sheet date and makes allowances for obsolete items.
Allowance for bad and doubtful debts
The provisioning policy for bad and doubtful debts of the Group is based on
the evaluation of collectability and ageing analysis of the accounts receivables and on
management’s judgement. At the balance sheet date, the accounts receivables were
stated net of provision. A considerable amount of judgement is required in assessing
the ultimate realisation of these receivables, including the current creditworthiness
and the past collection history of each customer. If the financial conditions of these
customers were to deteriorate, resulting in an impairment of their ability to make
payments, an additional allowance will be required.
Employee benefits
Defined contribution plans
The obligations for contributions to defined contribution retirement schemes
are recognised as expenses in the income statement as incurred. The assets of the
schemes are held separately from those of the Group in an independently administered
fund.
Long service payment
The Company’s net obligation in respect of long service payment under the
Hong Kong Employment Ordinance is the amount of future benefit that employees
have earned in return for their service in the current and prior periods. The obligation
is calculated using the projected unit credit method and is discounted to its present
value and the fair value of any related assets, including retirement scheme benefit, is
deducted.

– 46 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

Segment reporting
In accordance with the Group’s internal financial reporting, the Group has
determined that business segments be presented as the primary reporting format and
geographical as the secondary reporting format.
Unallocated costs represent corporate expenses. Segment assets consist primarily
of property, plant and equipment, inventories, receivables, operating cash and
investments in securities. Segment liabilities comprise operating liabilities and exclude
items such as taxation and certain corporate borrowings. Capital expenditure comprises
additions to property, plant and equipment, including additions resulting from
acquisitions through purchases of subsidiaries.
In respect of geographical segment reporting, sales are based on the destination
of shipment of merchandise and total assets and capital expenditure are where the
assets are located.
3. Turnover and revenue
Turnover and revenue recognised by category are analysed as follows:
2006 2005

HK$’000 HK$’000
(a) Turnover
Sale of motor trucks, coaches and
vehicle accessories 65,762 105,985
Provision of motor vehicle repairs and
maintenance services 25,439 27,010
Fuel commission income 3,786 4,754
Provision of other motor vehicle related services – 230
94,987 137,979

(b) Other income
Interest income 594 167
Gain on disposal of interests in a subsidiary – 7,953
Gain on disposal of property, plant and
equipment and land lease prepayment 50 6,985
Others 1,127 1,561
1,771 16,666

– 47 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

4. Loss before taxation
This is stated after charging (crediting):
(i) Finance costs
2006 2005

HK$’000 HK$’000
Interest on bank borrowings wholly
repayable within five years 117 698
Zero coupon convertible bonds 173 2,780
Interest paid to supplier 142 713
432 4,191

(ii) Other items
2006 2005

HK$’000 HK$’000
Auditors’ remuneration 1,000 940
Depreciation of property, plant and equipment 603 4,335
Amortisation on land lease prepayment – 46
Allowance on inventories 1,559 1,193
Operating lease charges on premises 7,475 987
Settlement of legal claim – 7,000
Impairment loss on interests
in unconsolidated subsidiaries – 100,800
Provision on amounts due
from unconsolidated subsidiaries – 1,133
Provision for success fee (note 26) 3,500 –
Allowance on trade and
other receivables written back (1,962) (4,398)
Staff costs, including directors’ emoluments:
– Salaries and other allowances 18,558 19,161
– Contributions to pension schemes 659 647
Gain on exchange (26) (170)

– 48 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

5. Directors’ remuneration
The remuneration of the Company’s directors is as follows:
Year ended 31 December 2006 2005
Basic
salaries,
allowances Pension
and other scheme
Name of Director Fees benefits contribution Total Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Mr. Alistair Macleod 300 ––300 300
Mr. Arne Karlsson 300 300 175
Mr. Cosimo Borrelli (Note i) –––––
Mr. David Giles Maund (Note ii)
Mr. Cheong Ying Chew, Henry 300 ––300 300
Mr. Kelvin Edward Flynn (Note iii) 75 75 –
Mr. Lau Siu Ki, Kevin 300 ––300 300
Mr. Louis Wen (Note iv) – 834 – 834 –
Mr. Paul Gerard Davies (Note v) ––––200
1,275 834 – 2,109 1,275
Note: (i) Mr. Borrelli resigned on 22 September 2006
(ii) Mr. Maund was appointed as executive Director on 22 September 2006
(iii) Mr. Flynn was re-designated from executive Director to non-executive Director on 22
September 2006
(iv) Mr. Wen was appointed as executive Director on 1 September 2006
(v) Mr. Davies retired on 26 May 2006
No director waived any emoluments during the year. No incentive payment nor
compensation for loss of office was paid or payable to any director for the year ended 31
December 2006 (2005: Nil).

– 49 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

6. Individuals with highest emoluments
Among the five individuals with the highest emoluments, one (2005: Nil) was an
executive director whose emoluments are disclosed in Note 5.
The emoluments paid to the other four highest (2005: five) individuals during the
year were as follows:
2006 2005

HK$’000 HK$’000
Basic salaries and allowances 2,954 3,342
Pension scheme contributions 36 38
2,990 3,380

The emoluments fell within the following bands:
Number of individuals
2006 2005

HK$Nil – HK$1,000,000 3 4
HK$1,000,001 – HK$1,500,000 1 1
During the year, no payments were paid to the four highest paid individuals (including
directors and other employees) as inducement to join or upon joining the Group or as
compensation for loss of office.

– 50 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

7. Taxation
The Company is incorporated in the Cayman Islands and is exempted from taxation
in the Cayman Islands. Hong Kong Profits Tax has not been provided in the financial
statements as the Company and its subsidiaries either have no assessable profits or have
unutilised tax losses to set off against current year’s assessable profits for both of the years
of 2006 and 2005.
2006 2005

HK$’000 HK$’000
Income tax credit for the year
– Over provision in prior year – (1,261)
– (1,261)
Reconciliation of tax expenses
2006 2005

HK$’000 HK$’000
Loss before taxation (24,752) (118,365)
Income tax at Hong Kong Profits Tax rate of 17.5% (4,332) (20,714)
Net effect of non-deductible expenses/
tax-exempted revenue 2,889 20,980
Over provision of income tax in prior year – (1,261)
Utilisation of previously unrecognised tax losses (702) –
Unrecognised deferred tax assets
in respect of tax losses 2,145 (266)
Taxation as per consolidated income statement – (1,261)
8. Loss attributable to shareholders
The loss attributable to shareholders includes a loss of approximately HK$31,137,000
(2005: HK$123,354,000) which has been dealt with in the financial statements of the
Company.

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APPENDIX I FINANCIAL AND OTHER INFORMATION

9. Loss per share
The calculation of basic loss per share is based on the consolidated loss attributable
to shareholders for the year of approximately HK$24,752,000 (2005: HK$117,104,000) and
on the weighted average of 435,772,000 shares (2005: 435,772,000 shares) in issue during
the year. No dilutive loss per share is presented as the effect of conversion of the convertible
bonds into ordinary shares is not considered since the average market price of the Company’s
shares was substantially lower than the conversion price during the year 2005.
As explained in Note 26 and Note 32, the Company has agreed to pay Alvarez &
Marsal Asia Limited (“A&M”) a success fee that comprises in part a certain amount of the
Company’s shares. At the balance sheet date, the necessary conditions for the award of the
success fee have not yet been met and therefore no contingently issuable ordinary shares in
respect of this success fee have been included in the calculation of diluted loss per share.
10. Property, plant and equipment
Furniture
Land and Leasehold and Motor
buildings improvements equipment vehicles Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At beginning of year 2005 49,150 992 2,699 923 53,764
Additions ––270 – 270
Disposal upon disposal of interests
in a subsidiary ––(205) – (205)
Disposals (43,332) (155) (887) (404) (44,778)
Depreciation charged for the year (1,402) (837) (1,603) (493) (4,335)
Deficit debited to reserve (4,505) –––(4,505)
Translation adjustments 89 – 15 (2) 102
––289 24 313
At 31 December 2005
Cost ––8,308 1,959 10,267
Accumulated depreciation (8,019) (1,935) (9,954)
––289 24 313
At beginning of year 2006 ––289 24 313
Additions – 2,867 561 439 3,867
Disposals ––(52) – (52)
Depreciation charged for the year – (312) (218) (73) (603)
Translation adjustments ––(1) – (1)
– 2,555 579 390 3,524
At 31 December 2006
Cost – 2,867 5,855 1,762 10,484
Accumulated depreciation – (312) (5,276) (1,372) (6,960)
– 2,555 579 390 3,524

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APPENDIX I FINANCIAL AND OTHER INFORMATION

11. Interests in unconsolidated subsidiaries (held for sale)
2006 2005

HK$’000 HK$’000
Interests in unconsolidated subsidiaries 149,054 149,054
Less: Impairment loss (100,880) (100,880)
48,174 48,174

Reclassification to interests
in unconsolidated subsidiaries held for sale (48,174) –
– 48,174
As explained in Note 2 to the financial statements, the financial statements of the
Group’s Taiwan Subsidiaries have not been included in the consolidated financial statements
of the Group in accordance with the Hong Kong Accounting Standard 27 “Consolidated and
Separate Financial Statements“ issued by the HKICPA and the Hong Kong Companies
Ordinance as in the opinion of the Directors, the inclusion of these financial statements may
result in an inaccurate picture of the Group’s financial position and performance for the
year. The Group’s share of the net assets of these entities, based on audited financial
information as at 31 December 2003 and after recognising an impairment loss of
HK$100,880,000 has been included in the 2005 and 2006 consolidated balance sheet as
interests in unconsolidated subsidiaries and interests in unconsolidated subsidiaries held for
sale respectively in the amount of HK$48,174,000.
On 30 December 2006, a disposal agreement was entered between the Company and
an independent purchaser to dispose interests in the Taiwan Subsidiaries at a disposal
consideration of HK$54,979,000. The disposal agreement was approved by the Company’s
independent shareholders and completed on 30 March 2007. As a result, the interests in
unconsolidated subsidiaries and amounts due to unconsolidated subsidiaries to be disposed
of have been reclassified as interests in unconsolidated subsidiaries held for sale and amounts
due to unconsolidated subsidiaries held for sale respectively as at 31 December 2006. More
information of the disposal is set out in Note 32 to the financial statements.
The amounts due to unconsolidated subsidiaries (held for sale) are unsecured, non-
interest bearing and have no fixed repayment term.

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APPENDIX I FINANCIAL AND OTHER INFORMATION

12. Investment securities
The Group The Company
2006 2005 2006 2005

HK$’000 HK$’000 HK$’000 HK$’000
At cost less impairment loss
Unlisted equity interest
in Taiwan, at cost 6,908 6,908 6,908 6,908
Less: Impairment loss (6,908) (6,908) (6,908) (6,908)
––––
13. Interests in subsidiaries
The Company
2006 2005

HK$’000 HK$’000
(a) Unlisted shares, at cost 22,568 74,934
Amounts due from subsidiaries 248,505 313,279
271,073 388,213

Less: Provision (218,700) (215,600)
52,373 172,613

(b) Unlisted shares held for sale, at cost 52,366 –
Less: Impairment loss (11,977) –
40,389 –
(c) The amounts due from/to subsidiaries are unsecured, non-interest bearing and
have no fixed repayment term.
(d) The amounts due to subsidiaries held for sale are unsecured, non-interest bearing
and have no fixed repayment term.

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APPENDIX I FINANCIAL AND OTHER INFORMATION

(e) Details of the subsidiaries at 31 December 2006 were as follows:
Issued and
Place of fully paid Percentage of
incorporation/ share capital/ equity interests
Name of subsidiary operation registered capital held by the Company Principal activities
Directly Indirectly
Allen Motor Co, Limited Hong Kong HK$2 – 93.7% Provision of agency services
for insurance and financing
of motor vehicles
Cybergear Limited British Virgin Islands US$1 100% – Investment holdings
Cyber Centre Limited Hong Kong HK$2 – 100% Inactive
Digital Cyber Technologies British Virgin Islands US$1 – 100% Inactive
Group Ltd
Forefront Automotive Services Hong Kong HK$20 – 100% Trading of motor vehicle
Company Limited accessories and
provision of
motor vehicle repairs and
maintenance services
Forefront (China) Company Hong Kong HK$20 – 100% Investment holdings
Limited
Forefront Finance Co Limited Hong Kong HK$2,000,000 – 93.7% Provision of
hire purchase financing
Forefront International Automotive British Virgin Islands/ US$3,254,681 100% – Trading of motor trucks,
Limited (Note 11) Taiwan coaches and vehicle
accessories and
provision of motor
vehicle repairs and
maintenance services
Forefront International Hong Kong HK$100,000 – 100% Trading of motor trucks
(Hong Kong) Limited Ordinary share and coaches
HK$6,000,000
Non-voting
deferred shares (i)
Forefront International Trading Mainland China US$200,000 – 100% Trading of motor trucks
(Shanghai) Co Ltd. (ii) and vehicle Accessories
Forefront Investment Holdings British Virgin Islands US$47,752 100% – Investment holdings
Limited
Forefront (Macau) Automotive Macau MOP25,000 – 100% Trading of coaches and
Limited vehicle accessories and
provision of motor
vehicle repairs and
maintenance services
EMainland China HK$625,000 (iii) – 100% Trading of motor trucks,
"! (iii) coaches and
vehicle accessories
Forerunner (China) Development Hong Kong HK$10,000 – 63.75% Investment holdings
Co Ltd

– 55 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

Griffin Holdings Limited Hong Kong HK$1 – 100% Investment holdings
Merryork International Ltd British Virgin Islands US$1 100% – Investment holdings
Pureland Development Corporation British Virgin Islands US$1 – 100% Investment holdings
Prime Wish Development Limited Hong Kong HK$2 – 93.7% Investment holdings
Scantle Management Limited British Virgin Islands US$2 100% – Investment holdings
Stareast International Limited British Virgin Islands US$2 – 100% Investment holdings
Sunshine Credit Limited (Note 11) Taiwan NT$201,000,000 – 93.7% Provision of
hire purchase financing
U-Drive Company Limited Hong Kong HK$1,000 – 93.7% Provision of
chain services to
vehicle customers
U-Drive Smart Card Company Taiwan NT$360,000,000 – 93.7% Development and operation
Limited (Note 11) of multi- application
smart card system
V-Guard Technology Limited Hong Kong HK$100 – 93.7% Provision of
telematics services
Notes:
(i) Holders of deferred shares have no rights to vote at general meetings or receive any
dividend. Upon winding up, they are entitled to one half of the balance of the company’s
assets after HK$100,000,000,000 has been distributed to holders of ordinary shares.
(ii) Forefront International Trading (Shanghai) Co., Ltd. is a wholly foreign owned enterprise
established in People’s Republic of China (“Mainland China”) to be operated for a
period of 50 years up to May 2050. The Company is in the process of voluntary winding
up.
(iii)E"!(Forefront Automotive Services (Shenzhen) Company
Limited) is a wholly foreign owned enterprise established in Mainland China to be operated
for a period of 30 years up to June 2036. The authorised share capital of the company is
HK$3,500,000.
None of the subsidiaries had any loan capital in issue at any time during the
year ended 31 December 2006.
Issued and
Place of fully paid Percentage of
incorporation/ share capital/ equity interests
Name of subsidiary operation registered capital held by the Company Principal activities
Directly Indirectly

– 56 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

14. Inventories
The Group
2006 2005

HK$’000 HK$’000
Motor trucks and coaches 24,843 24,772
Vehicle accessories 8,029 15,354
32,872 40,126

Less: Provision for obsolete and
slow-moving inventories (2,517) (6,018)
30,355 34,108

At 31 December 2006, the amount of inventories included in above carried at net
realisable value totalled approximately HK$2,497,000 (2005: HK$5,750,000) and the balance
of approximately HK$27,858,000 (2005: HK$28,358,000) was at cost.
15. Trade and other receivables
The Group The Company
2006 2005 2006 2005

HK$’000 HK$’000 HK$’000 HK$’000
Trade receivables 10,265 18,790 ––
Other receivables
Deposits, prepayments and
other debtors 8,149 47,476 1,514 39,195
18,414 66,266 1,514 39,195

Included in deposits, prepayments and other debtors at 31 December 2005 was a
receivable of approximately HK$38,850,000 being US$5 million of unpaid proceeds from
the US$15 million zero coupon convertible bonds issued by the Company in 2004 (Note 20).

– 57 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

At 31 December 2006 other receivables included an amount of approximately
HK$307,000 (2005: HK$2,362,000) due from Scania CV AB (publ) (“Scania”), the Group’s
principal supplier and the holding company of Scania Trade Development AB, a substantial
shareholder of the Company.
The Group grants to its customers credit terms ranging from 1 to 3 months. The
ageing analysis of the trade receivables at the balance sheet date is as follows:
The Group
2006 2005

HK$’000 HK$’000
0 to under 3 months 10,257 16,457
3 to under 6 months 61 2,342
6 to under 9 months – 129
9 to under 12 months 56 88
Over 12 months 5,623 7,939
15,997 26,955

Less: Allowance on bad and doubtful debts (5,732) (8,165)
10,265 18,790

16. Pledged deposits
As at 31 December 2006, the Group pledged deposits approximately HK$558,000
(2005: HK$1,474,000) as collateral to satisfy contingent warranty and delivery obligations
in relation to certain sales contracts.
17. Trade and other payables
The Group The Company
2006 2005 2006 2005

HK$’000 HK$’000 HK$’000 HK$’000
Trade payables 14,991 18,223 ––
Other payables
Accrued charges
and other creditors 15,098 11,690 7,528 3,039
30,089 29,913 7,528 3,039

– 58 –
APPENDIX I FINANCIAL AND OTHER INFORMATION

The ageing analysis of the trade payables at the balance sheet date is as follows:
The Group
2006 2005

HK$’000 HK$’000
0 to under 3 months 13,686 15,126
3 to under 6 months 1,027 1,059
6 to under 9 months – 1,747
9 to under 12 months ––
Over 12 months 278 291
14,991 18,223

Included in trade payables at 31 December 2006 was approximately HK$10,119,000
(2005: HK$9,333,000) due to Scania.
18. Defined contribution plans
The group companies in Hong Kong participate in the Mandatory Provident Fund (the
“MPF Scheme”) which is a defined contribution scheme managed by independent trustees.
The assets of the fund are held separately from those of the group companies and are
managed by independent professional fund managers. Under the MPF Scheme, each of the
Group (the employer) and its employees make monthly contributions to the MPF Scheme at
5% of the employees’ earnings as defined under the Mandatory Provident Fund legislation.
The monthly contributions of each of the employees are subject to a cap of HK$1,000 and
thereafter contributions are voluntary.
Contributions of approximately HK$106,000 (2005: HK$106,000) were payable to
the fund at 31 December 2006.

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APPENDIX I FINANCIAL AND OTHER INFORMATION

19. Interest-bearing borrowings
The Group The Company
2006 2005 2006 2005

HK$’000 HK$’000 HK$’000 HK$’000
Unsecured bank loans
– Current portions – 9,366 – 9,366
– Non-current portions ––––
– 9,366 – 9,366
The Group The Company
2006 2005 2006 2005

HK$’000 HK$’000 HK$’000 HK$’000
The borrowings are repayable:
Within one year – 9,366 – 9,366
After one year but
within two years ––––
– 9,366 – 9,366
Less: Amounts repayable
within one year included
under current liabilities – (9,366) – (9,366)
Amounts repayable after one year ––––
Bank borrowings of approximately HK$ 9.4 million were settled in full in May 2006
and no further borrowings has been obtained since then.

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APPENDIX I FINANCIAL AND OTHER INFORMATION

20. Zero coupon convertible bonds
The zero coupon convertible bonds were fully redeemed, repurchased and cancelled
in 2006. In February 2006, the Company redeemed approximately US$4 million of the
convertible bonds together with redemption premium interest and signed an agreement with
Mr. Michael Tsai to repurchase the remaining approximately US$5 million of the convertible
bonds that were subscribed by him but proceeds were unpaid for HK$1. The repurchased
approximately US$5 million of convertible bonds was then cancelled pursuant to the terms
of the bonds issue upon the repurchase by the Company being completed in May 2006.
21. Deferred taxation
Deferred taxation is calculated on temporary differences under liability method using
applicable tax rate of 17.5% (2005: 17.5%) for group companies incorporated in Hong
Kong.
The Group has not recognised deferred tax asset in respect of unused tax losses of
HK$123,100,000 (2005: HK$110,841,000) relating to certain Hong Kong incorporated
subsidiaries. The tax losses have no expiry date under current tax legislation. The deferred
tax asset has not been recognised due to uncerta