THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this Circular or as to the action to be taken, you should
consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional
accountant or other professional adviser.
If you have sold or transferred all of your shares in Peace Mark (Holdings) Limited, you should
at once hand this Circular to the purchaser or transferee or to the bank, stockbroker or other agent
through whom the sale or transfer was effected for transmission to the purchaser or transferee.
This Circular is for information purposes only and does not constitute an invitation or offer to
acquire, purchase or subscribe any securities.
(Incorporated in Bermuda with limited liability)
Stock Code: 0304
POSSIBLE MAJOR TRANSACTION
AND CONSIDERATION ISSUE

Pre-Conditional Voluntary General Offer by
Macquarie Securities (Asia) Pte Limited
for and on behalf of
A-A United Limited
(an indirect wholly-owned subsidiary of Peace Mark (Holdings) Limited)
for
Sincere Watch Limited
A notice convening a special general meeting of Peace Mark (Holdings) Limited to be held at The
President and Chairman room, World Trade Centre Club, 38th Floor, World Trade Centre, 280
Gloucester Road, Causeway Bay, Hong Kong on Friday, 1 February 2008 at 10:00 a.m. is set out
on pages 300 and 301 of this Circular. Whether or not you are able to attend the meeting, you are
requested to complete and return the accompanying form of proxy to Tricor Secretaries Limited at
26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in
any event not less than 48 hours before the time appointed for the holding of the meeting. Completion
and return of the form of proxy will not preclude you from attending and voting in person at the
meeting should you so wish.
16 January 2008

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Contents
DeFInItIons	1
LetteR FRoM tHe CoMPAnY	6
1	INTRODUCTION	6
2	IRREVOCABLE UNDERTAKINGS AND THE BREAK FEE AGREEMENT	7
3	THE OFFER	9
4	MANAGEMENT	16
5	FINANCING OF THE OFFER	17
6	THE OFFEROR’S INTENTIONS FOR SINCERE WATCH	17
7	REASONS FOR THE OFFER	17
8	RISKS IN RELATION TO THE OFFER	18
9	BUSINESS OF SINCERE WATCH AND SINCERE WATCH HK	19
10	BUSINESS OF THE OFFEROR	21
11	FINANCIAL INFORMATION AND WAIVERS FROM
THE STOCK EXCHANGE	22
12	GENERAL	25
13	SPECIAL GENERAL MEETING	25
14	RECOMMENDATION	25
15	ADDITIONAL INFORMATION	26
APPenDIX I – PeACe MARK GRoUP FInAnCIAL InFoRMAtIon	27
APPenDIX II – sInCeRe WAtCH GRoUP FInAnCIAL InFoRMAtIon	97
APPenDIX III – stAteMent oF Assets AnD LIABILItIes oF tHe
	PeACe MARK GRoUP AnD tHe sInCeRe WAtCH GRoUP	281
APPenDIX IV – FInAnCIAL InFoRMAtIon ReLAtInG
	to tHe enLARGeD GRoUP	283
APPenDIX V – DIFFeRenCes BetWeen HonG KonG FInAnCIAL
	RePoRtInG stAnDARDs AnD sInGAPoRe FInAnCIAL
	RePoRtInG stAnDARDs	285
APPenDIX VI – GeneRAL InFoRMAtIon	288
notICe oF sPeCIAL GeneRAL MeetInG	300

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Definitions
In this Circular, unless the context otherwise requires, the following expressions shall have the
following meanings:
“Announcement” the announcement of a possible major transaction by Peace Mark
dated 7 December 2007;
“Board” the board of Directors;
“Break Fee” S$5.3 million, which is equivalent to .0 per cent. of the value
of the maximum aggregate Offer Consideration;
“Break Fee Agreement” the break fee agreement dated 7 December 2007 between the
Major Shareholder and Peace Mark which sets out the terms for
payment of the Break Fee;
“Business Day” a day (which is not a Saturday, a Sunday or a gazetted public
holiday) on which commercial banks are open for business in
Hong Kong and Singapore;
“Chrono Star” Chrono Star International Participations Groupe Franck Muller
S.A.;
“Chrono Star Agreement” the conditional sale and purchase agreement dated 3 January 2008
between Sincere Watch and Mr. Tay in respect of the Chrono
Star Divestment;
“Chrono Star Divestment” has the meaning given in paragraph 9.3 (Chrono Star Divestment)
of the Letter from the Company in this Circular;
“Chrono Star Shares” 75,000 existing ordinary shares in Chrono Star, being Sincere
Watch’s interest in Chrono Star;
“Circular” this circular, which is issued by Peace Mark to the Shareholders
in respect of the Offer;
“Concert Parties” the parties acting or presumed to be acting in concert (within
the meaning ascribed to that term under the Singapore Takeovers
Code) with Peace Mark and the Offeror in relation to the
Offer;
“Controlling Shareholders a deed of undertaking dated 7 December 2007 by the Peace
Irrevocable Undertaking” Mark Controlling Shareholders in favour of the Major Shareholder
pursuant to which the Peace Mark Controlling Shareholders have
agreed to, among other things, vote in favour of the resolutions
put forward at the Special General Meeting;
“Directors” the directors of Peace Mark;

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Definitions
“Encumbrance” in respect of any shares, means any mortgage, debenture, lien,
charge, pledge, title retention, right to acquire, security interest,
option, pre-emptive or other similar right, right of first refusal
and any other encumbrance or condition whatsoever;
“Enlarged Group” the Peace Mark Group as enlarged by the consolidation of the
Sincere Watch Group;
“Exchange Rate” as to any day, the exchange rate quoted on Bloomberg;
“Exclusivity Period” the period from the date of the Break Fee Agreement until the
earliest of (i) the date the Offer is completed, terminated, lapses
or is withdrawn, (ii) the date falling 20 Business Days from
the date of the Break Fee Agreement, or (iii) the date the Break
Fee Agreement is terminated by mutual consent in writing by
the parties to the Break Fee Agreement;
“Executive” the Executive Director of the Corporate Finance Division of
the Securities and Futures Commission of Hong Kong or any
delegate of the Executive Director;
“Financial Adviser” Macquarie Securities (Asia) Pte Limited, the financial adviser
to the Company and the Offeror in respect of the Offer;
“Further Information” has the meaning given in paragraph (Financial Information
and Waivers from the Stock Exchange) of the Letter from the
Company in this Circular;
“HK$” Hong Kong dollar, the lawful currency of Hong Kong;
“HKFRS” Hong Kong Financial Reporting Standards;
“Hong Kong” the Hong Kong Special Administrative Region of the PRC;
“IFRS” International Financial Reporting Standards;
“Latest Practicable Date” January 2008, being the latest practicable date for the collation
of relevant information prior to the printing of this Circular;
“Listing Rules” the Rules Governing the Listing of Securities on the Stock
Exchange;
“Major Shareholder” TBJ Holdings Pte Ltd, the tenderer of the Major Shareholder’s
Shares and an Unconnected Person;

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Definitions
“Major Shareholder a deed of undertaking by the Major Shareholder dated 7
Irrevocable Undertaking” December 2007 in favour of the Company and the Offeror to,
among other things, accept the Offer from the Offeror and not to
accept any third party offer in respect of the Major Shareholder’s
Shares;
“Major Shareholder’s Shares” 04,79,307 Sincere Watch Shares, representing, as at 6 December
2007, approximately 50.67 per cent. of the issued share capital
of Sincere Watch;
“Model Code” the Model Code for Securities Transactions by Directors of Listed
Companies set out in Appendix 0 to the Listing Rules;
“Mr. Muller” Mr. Franck Muller;
“Mr. Tay” Mr. Tay Liam Wee, the Chief Executive Officer and Group
Managing Director of Sincere Watch, Chairman of Sincere
Watch HK and the legal and beneficial owner of the Major
Shareholder;
“New Peace Mark Shares” new ordinary shares of HK$0.0 each in the capital of the
Company to be issued in connection with the Offer (assuming
full acceptance of the Offer from all shareholders of Sincere
Watch, 47,23,29 New Peace Mark Shares will be issued);
“Offer” as at the date of this Circular, the voluntary conditional offer
by the Offeror for the Sincere Watch Shares, other than those
Sincere Watch Shares (if any) already owned, controlled or agreed
to be acquired by the Company, the Offeror and their Concert
Parties, subject to the satisfaction of the Pre-conditions to be
effected by means of a voluntary general offer made pursuant
to Rule 5 of the Singapore Takeovers Code;
“Offer Announcement” the formal announcement of a firm intention to make the Offer,
setting out the terms and conditions of the Offer in accordance
with the Singapore Takeovers Code in the event that the Pre-
conditions to the Offer have been satisfied;
“Offer Consideration” (a) S$2.05 per Sincere Watch Share in cash (representing
approximately HK$.045 per Sincere Watch Share at the
Exchange Rate on 6 December 2007); and
(b) 0.228 New Peace Mark Shares at the issue price of
HK$2.096 per New Peace Mark Share;

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Definitions
“Offer Document” the formal document making the Offer to be sent to Sincere
Watch shareholders setting out the terms and conditions of the
Offer in accordance with the Singapore Takeovers Code and
enclosing the appropriate forms of acceptance;
“Offeror” A-A United Limited, a business company incorporated in the
British Virgin Islands with limited liability and an indirect
wholly-owned subsidiary of Peace Mark;
“Peace Mark” or the “Company” Peace Mark (Holdings) Limited, an exempted company incorporated
in Bermuda with limited liability, the shares of which are listed
on the Stock Exchange;
“Peace Mark Controlling the ultimate controlling shareholders of Peace Mark who have
Shareholders” signed the Controlling Shareholders Irrevocable Undertaking,
namely, Mr. Patrick Chau Cham Wong and Mr. Leung Yung;
“Peace Mark Group” Peace Mark and its subsidiaries;
“Peace Mark Options” share options which are convertible into Peace Mark Shares;
“Peace Mark Shares” existing ordinary shares of HK$0.0 each in the capital of the
Company;
“PRC” The People’s Republic of China;
“Pre-conditional Offer the announcement made for and on behalf of the Offeror
Announcement” pursuant to the Singapore Takeovers Code announcing the Offer
and dated 7 December 2007;
“Pre-conditions” the pre-conditions to the Offer as set out in paragraph 3.2 of
the Letter from the Company in this Circular;
“Reference Period” the three month period immediately preceding the date of the
Pre-conditional Offer Announcement;
“S$” Singapore dollar, the lawful currency of Singapore;
“SFO” the Securities and Futures Ordinance (Cap. 57 of the Laws of
Hong Kong);
“SFRS” Singapore Financial Reporting Standards;
“SGX-ST” the Singapore Exchange Securities Trading Limited;

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Definitions
“Shareholders” the shareholders of Peace Mark;
“SIC” the Securities Industry Council of Singapore;
“Sincere Watch” Sincere Watch Limited, a public company incorporated in
Singapore with limited liability and the shares of which are
listed on the SGX-ST;
“Sincere Watch Board” the board of directors of Sincere Watch;
“Sincere Watch Group” Sincere Watch and its subsidiaries;
“Sincere Watch HK” Sincere Watch (Hong Kong) Limited, a public company incorporated
in the Cayman Islands with limited liability and the shares of
which are listed on the Stock Exchange;
“Sincere Watch Shares” ordinary shares in the capital of Sincere Watch;
“Singapore” the Republic of Singapore;
“Singapore Takeovers Code” the Singapore Code on Take-overs and Mergers as revised with
effect from April 2007;
“Special General Meeting” the special general meeting of Peace Mark to be held at The
President and Chairman room, World Trade Centre Club, 38th
Floor, World Trade Centre, 280 Gloucester Road, Causeway Bay,
Hong Kong on Friday, February 2008 at 0:00 a.m., the notice
of which is set out on pages 300 and 30 of this Circular;
“Stock Exchange”
All references in this Circular to times and dates are references to Hong Kong times and dates
unless otherwise indicated.
For the purposes of this Circular, unless otherwise stated, amounts in S$ have been converted at
S$:HK$ 1:5.453, being the Exchange Rate on the Latest Practicable Date.

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LETTER FROM THE COMPANY

(Incorporated in Bermuda with limited liability)
Stock Code: 0304
Chairman: Head Office:
Mr. Chau Cham Wong, Patrick Unit 3, 12th Floor
Cheung Fung Industrial Building
Executive Directors: 23-39 Pak Tin Par Street
Mr. Chau Cham Wong, Patrick (Chairman) Tsuen Wan
Mr. Leung Yung (Chief Executive Officer) Hong Kong
Mr. Tsang Kwong Chiu, Kevin, FCCA, HKICPA, MBA, MSc
Mr. Man Kwok Keung Registered office:
Mr. Cheng Kwan Ling Clarendon House
2 Church Street
Independent Non-executive Directors: Hamilton HM11
Ms. So, Susan Bermuda
Mr. Kwok Ping Ki, Albert
Mr. Tang Yat Kan
Mr. Wong Yee Sui, Andrew, CPA
Mr. Mak Siu Wing, Clifford
1 January 2008
To the Shareholders
Dear Sir/Madam,
POSSIBLE MAJOR TRANSACTION
AND CONSIDERATION ISSUE

Pre-Conditional Voluntary General Offer by
Macquarie Securities (Asia) Pte Limited
for and on behalf of
A-A United Limited
(an indirect wholly-owned subsidiary of Peace Mark (Holdings) Limited)
for
Sincere Watch Limited
1. INTRODUCTION

Peace Mark announced a possible major transaction in relation to the Offer on 7 December
2007 in Hong Kong and at the same time the Financial Adviser on behalf of the Offeror made the Pre-
conditional Offer Announcement in Singapore in compliance with the Singapore Takeovers Code.

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LETTER FROM THE COMPANY

The purpose of this Circular is to provide the Shareholders with further information in relation
to the Offer. None of the Directors or their respective associates as defined in the Listing Rules, have
any competing interests in the Offer.
This Circular also contains a copy of the notice of the Special General Meeting to be held at
The President and Chairman room, World Trade Centre Club, 38th Floor, World Trade Centre, 280
Gloucester Road, Causeway Bay, Hong Kong on Friday, 1 February 2008 at 10:00 a.m. to consider
and, if deemed fit, approve the Offer, pursuant to the Listing Rules.
2. IRREVOCABLE UNDERTAKINGS AND THE BREAK FEE AGREEMENT

Save as disclosed below, there is no agreement, arrangement or understanding between the
Company, the Offeror or any of their Concert Parties and any of the directors, or recent directors,
shareholders or recent shareholders of Sincere Watch having any connection with or dependence upon
the Offer, as at the Latest Practicable Date.
2.1 Major Shareholder Irrevocable Undertaking
Pursuant to the Major Shareholder Irrevocable Undertaking dated 7 December 2007 given
by the Major Shareholder in favour of the Company and the Offeror, the Major Shareholder
agreed, subject to the Offeror proceeding with the Offer on the basis of the Offer Consideration,
to accept the Offer from the Offeror in respect of the Major Shareholder’s Shares comprising
104,719,307 Sincere Watch Shares and representing as at December 2007 approximately 50.7
per cent. of the issued share capital of Sincere Watch.
If the Offer proceeds and the Major Shareholder accepts the Offer, the consideration under
the Offer for the Major Shareholder’s Shares will be S$28.5 million (representing approximately
HK$1,44.1 million at the Exchange Rate on the Latest Practicable Date) of which S$214.8
million will be paid in cash and S$53.7 million will be settled in New Peace Mark Shares.
The maximum total consideration under the Offer amounts to S$530 million (representing
approximately HK$2,890.1 million at the Exchange Rate on the Latest Practicable Date) or
approximately S$2.54 per Sincere Watch Share (representing approximately HK$13.981 per
Sincere Watch Share at the Exchange Rate on the Latest Practicable Date). The New Peace
Mark Shares issued to the Major Shareholder will be subject to a three-year lock-up period. The
consideration and other terms of the Major Shareholder Irrevocable Undertaking were arrived
at after arm’s length negotiations between the parties involved with reference to, among other
things, the prevailing market price of Sincere Watch Shares, the nature and performance of
Sincere Watch’s business, the broader industry outlook and the typical control premium paid
in Singapore for transactions of this nature.
The other terms of the Major Shareholder Irrevocable Undertaking include undertakings by
the Major Shareholder (a) not to compete with the business of Sincere Watch and not to solicit
employees of Sincere Watch within the shorter of the period of three years from completion of
the Offer or the period from completion of the Offer up to the termination of the employment
of Mr. Tay with Sincere Watch subject to certain exceptions, including the shareholding and

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LETTER FROM THE COMPANY

directorship of Mr. Tay in Chrono Star, (b) during the Exclusivity Period, not to accept any other
offer from any person other than the Offeror and to vote against any competing proposals, (c)
during the Exclusivity Period, to vote against, among other things, any disposal by Sincere Watch
or its subsidiaries of any material assets, with the exception of the Chrono Star Divestment,
and any action which might result in the frustration of the Offer, and (d) to do and execute all
such things and documents as may be necessary for the fulfilment of its obligations under the
Major Shareholder Irrevocable Undertaking.
With respect to the control premium, this reflects the premium over the prevailing market
price of Sincere Watch’s shares, taking into account the fact that the Offeror would be able to
gain a greater than 50 per cent. interest in Sincere Watch.
The Major Shareholder’s Shares will be tendered free from any Encumbrance.
As at the Latest Practicable Date, to the best of the knowledge of the Board having made
all reasonable enquiries, neither the Company, the Offeror nor any of their Concert Parties has
an interest in any Sincere Watch Shares.
Save as disclosed in this Circular, neither the Company, the Offeror nor any of their
Concert Parties has received any irrevocable undertaking from any party to accept or reject
the Offer.
2.2 Controlling Shareholders Irrevocable Undertaking
Pursuant to the Controlling Shareholders Irrevocable Undertaking dated 7 December
2007 given by the Peace Mark Controlling Shareholders in favour of the Major Shareholder, the
Peace Mark Controlling Shareholders agreed to vote, or procure the voting of, all their shares
in the Company, in favour of the proposed acquisition of Sincere Watch Shares by the Offeror
by way of the Offer, to take all steps to ensure that the Company will obtain all necessary
resolutions to proceed with the Offer and take all steps to procure that the Company seeks all
relevant clearances and/or approvals in connection with the proposed acquisition. Accordingly,
the Peace Mark Controlling Shareholders will vote in favour of the resolutions to be put to the
Shareholders at the Special General Meeting.
2.3 Break Fee Agreement
On 7 December 2007, Peace Mark and the Major Shareholder entered into the Break Fee
Agreement, pursuant to which the Major Shareholder has agreed to pay the Break Fee to Peace
Mark if the Major Shareholder enters into a competing proposal during the Exclusivity Period
and Peace Mark has agreed to pay the Break Fee to Sincere Watch if Peace Mark enters into a
competing acquisition, during the period of 120 Business Days from 18 October 2007.
The rationale for the Break Fee is to demonstrate the commitment by both Peace Mark
and the Major Shareholder to commit to the Offer. The quantum of the Break Fee was agreed
as a result of arm’s length negotiations between the parties involved and complies with the
requirement under Rule 13 of the Singapore Takeovers Code that it should not exceed one per
cent. of the value of the offeree company calculated by reference to the offer price.

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LETTER FROM THE COMPANY
3. THE OFFER

3.1 Pre-conditional Offer Announcement in Singapore
At the same time as the making of the Announcement, the Financial Adviser on behalf
of the Offeror made the Pre-conditional Offer Announcement in Singapore.
3.2 Pre-conditions
The making of the Offer is subject to the following pre-conditions being satisfied no later
than the date falling four months after the date of the Pre-conditional Offer Announcement,
that is on or by 7 April 2008:
(a) clearance by the Stock Exchange of this Circular and clearance of documents or
announcements required by the Securities and Futures Commission of Hong Kong
and/or the Stock Exchange, for or in connection with the structure of the Offer;
and
(b) the passing of all resolutions as may be necessary to approve the making of the
Offer at the Special General Meeting (or any adjournment thereof).
The Offeror will be obliged to proceed with the Offer once all of the Pre-conditions are
satisfied, and further announcements will be made accordingly. As at the Latest Practicable
Date, the Pre-condition referred to in (a) above has been satisfied. Upon the passing of the
resolutions to be put to the Shareholders at the Special General Meeting, the Pre-condition
referred to in (b) above will be satisfied.
3.3 Terms
Upon satisfaction of the Pre-conditions, the Offeror will make the Offer for the Sincere
Watch Shares, in accordance with Rule 15 of the Singapore Takeovers Code. The Financial
Adviser will also release the Offer Announcement for and on behalf of the Offeror.
The terms of the Offer have been determined by reference to the Singapore Takeovers
Code.
The consideration under the Offer, if and when made, will be made on the following
basis:
For each Sincere Watch Share: S$2.051 in cash
and
0.228 New Peace Mark Shares at the issue
price of HK$12.096 per New Peace Mark
Share

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LETTER FROM THE COMPANY

The Sincere Watch Shares will be acquired (a) fully paid; (b) free from any Encumbrances;
and (c) together with all rights, benefits and entitlements attached thereto as of the date of the
Pre-conditional Offer Announcement and thereafter attaching thereto, including the right to
receive and retain all dividends, rights and other distributions (if any) declared, paid or made
by Sincere Watch on or after the date of the Pre-conditional Offer Announcement.
The Offer Consideration is expected to be 80 per cent. in the form of cash and 20 per cent.
in the form of New Peace Mark Shares and will be paid on the same basis as the consideration
for the Major Shareholder’s Shares, excluding the three-year lock-up period. Assuming full
acceptance of the Offer from all shareholders of Sincere Watch, the New Peace Mark Shares
will constitute 4.5 per cent. of the existing issued share capital of the Company and 4.3 per
cent. of the enlarged issued share capital of the Company after issuance of the New Peace Mark
Shares. The New Peace Mark Shares will be issued at a price equal to the volume weighted
average price of the Company’s shares for the 20 trading days preceding 7 December 2007,
the date of the Pre-conditional Offer Announcement. Application will be made to the Stock
Exchange for the listing of and permission to deal in the New Peace Mark Shares. This Circular
is for information purposes only and does not constitute an invitation or offer to acquire,
purchase or subscribe the New Peace Mark Shares.
The Offer Consideration represents a premium of approximately 11 per cent. to the
closing price of S$2.32 per Sincere Watch Share on December 2007 (being the last market
day on which there were trades on the SGX-ST prior to the date of the Pre-conditional Offer
Announcement) (as traded on the SGX-ST) and a premium of approximately 19 per cent. to
the average closing price of S$2.14 per Sincere Watch Share for the one-month period prior
to the date of the Pre-conditional Offer Announcement (as traded on the SGX-ST). As at the
Latest Practicable Date, the market value of Sincere Watch Shares was S$51.7 million based
on a closing price of S$2.50 per Sincere Watch Share (as traded on SGX-ST).
The Offer Consideration has been determined on the basis of willing buyer, willing seller
negotiations having regard to various factors including, but not limited to, the prevailing market
price of Sincere Watch Shares, the nature and performance of Sincere Watch’s business, the
broader industry outlook and the typical control premium paid in Singapore for transactions
of this nature.
So far as the Offeror is aware, the Memorandum and Articles of Association of Sincere
Watch do not contain any restrictions on the right to transfer the Sincere Watch Shares which
are the subject of the Offer, which has the effect of requiring holders of such Sincere Watch
Shares, before transferring them, to offer them for purchase to shareholders of Sincere Watch
or to any person.
As at the Latest Practicable Date, to the best of the knowledge of the Board having made
all reasonable enquiries, neither the Company, the Offeror nor any of their Concert Parties has
an interest in the Sincere Watch Shares under any option, agreement or other arrangement save
for the Major Shareholder Irrevocable Undertaking. As at the Latest Practicable Date, the Major
Shareholder held 104,719,307 Sincere Watch Shares.

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LETTER FROM THE COMPANY

It is intended that Peace Mark will appoint at least one director to the board of Sincere
Watch, however at this stage the number and identity of such director(s) have not been
confirmed.
3.4 Acceptance Condition
The Offer will, if and when made, be conditional on the Offeror having received, by the
close of the Offer, valid acceptances in respect of such number of Sincere Watch Shares which,
when taken together with the number of Sincere Watch Shares already owned, controlled or
agreed to be acquired before or during the Offer by or on behalf of the Offeror and its Concert
Parties, will result in the Offeror and its Concert Parties holding such number of Sincere Watch
Shares carrying more than 50 per cent. of the voting rights attributable to the issued share
capital of Sincere Watch as at the close of the Offer.
Accordingly, the Offer will not become or be capable of being declared unconditional
as to acceptances until the Offeror has received valid acceptances in respect of such number
of Sincere Watch Shares which, when taken together with the number of Sincere Watch Shares
already owned, controlled or agreed to be acquired before or during the Offer by or on behalf
of the Offeror and its Concert Parties, will result in the Offeror and its Concert Parties holding
such number of Sincere Watch Shares representing more than 50 per cent. of the voting rights
attributable to the issued share capital of Sincere Watch.
Pursuant to the Major Shareholder Irrevocable Undertaking, which is legally binding,
the Major Shareholder has undertaken to tender its Sincere Watch Shares, representing, as at
December 2007 approximately 50.7 per cent. of the issued share capital of Sincere Watch,
therefore the acceptance condition will be met and the Offer will become unconditional as to
acceptances once the Major Shareholder tenders the Major Shareholder’s Shares in acceptance
of the Offer.
The Offer, if and when made, will also be subject to obtaining listing approval by the
Stock Exchange for the New Peace Mark Shares.
3.5 The New Peace Mark Shares
As at the Latest Practicable Date, the authorised share capital of the Company is
HK$00,000,000 and the amount of paid-up issued capital of the Company is HK$104,248,428.
The New Peace Mark Shares will be issued pursuant to the general mandate to allot, issue and
deal with the shares of the Company granted to the Directors at the annual general meeting
of the Company held on 23 August 2007, which authorised the Directors to allot and issue a
maximum of 207,04,45 shares of the Company.
The general mandate has not been utilised prior to the date of this Circular and the
Company has not undertaken any equity fund raising activities in the 12 months immediately
before the date of this Circular.

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LETTER FROM THE COMPANY

The New Peace Mark Shares will rank pari passu with the Company’s existing ordinary
shares, save that the New Peace Mark Shares issued to the Major Shareholder will be subject
to a three-year lock-up period.
Application will be made to the Stock Exchange for the listing of and permission to deal
in the New Peace Mark Shares. Peace Mark has been advised by its Bermudian legal counsel
that in consideration of the issue of the New Peace Mark Shares, the Offeror should issue new
ordinary shares to Peace Mark. The reason for this is that Peace Mark is offering New Peace
Mark Shares as part of the Offer Consideration and therefore effectively settling part of the
Offer Consideration on behalf of the Offeror (its indirect wholly-owned subsidiary). As at the
Latest Practicable Date, the actual number of new ordinary shares in the Offeror to be issued
to Peace Mark has not been determined. A further announcement will be made by the Company
upon the number of shares being determined.
This Circular is for information purposes only and does not constitute an invitation
or offer to acquire, purchase or subscribe the New Peace Mark Shares.
3.6 Value of the Offer
On the basis of the Offer Consideration, the entire share capital of Sincere Watch in issue
as at December 2007 was valued at approximately S$530 million (representing approximately
HK$2,854.1 million at the Exchange Rate on December 2007) representing a premium of
290 per cent. to the audited consolidated net assets of Sincere Watch as at 31 March 2007 of
approximately S$135.8 million (representing approximately HK$731.3 million at the Exchange
Rate on December 2007). The Sincere Watch Shares in aggregate were valued at approximately
S$479.5 million (representing approximately HK$2,582.1 million at the Exchange Rate on
December 2007) based on the closing price of S$2.32 per Sincere Watch Share on December
2007 (being the last market day on which there were trades on the SGX-ST prior to the date of
the Pre-conditional Offer Announcement) and at S$51.7 million based on the closing price of
S$2.50 per Sincere Watch Share on the Latest Practicable Date. The Offer Consideration will
be paid on the same basis as the consideration for the Major Shareholder’s Shares, excluding
the three-year lock-up period.
3.7 Offer Document
If the Pre-conditions are satisfied, the formal document making the Offer and setting out
the terms and conditions of the Offer and enclosing the appropriate forms of acceptance will
be despatched to holders of Sincere Watch Shares not earlier than 14 days and not later than
21 days from the date of the Offer Announcement in accordance with the Singapore Takeovers
Code.
The Offer Document will not be sent to the Shareholders as all relevant information is
contained in this Circular. The Offer Document will, however, be available on the SGX-ST
website at www.sgx.com after it has been despatched to holders of Sincere Watch Shares.

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LETTER FROM THE COMPANY

3.8 Tentative Timetable of the Offer
The tentative timetable below is indicative only and each of the dates are subject to
change.
Release of Offer Announcement 1 February 2008 (assuming that the Pre-conditions
are satisfied on 1 February 2008)
Despatch of the Offer Document to No earlier than 15 February 2008 and no
holders of Sincere Watch Shares later than 22 February 2008 (assuming
that the Offer Announcement is released on
1 February 2008)
First possible closing date of the Offer 14 March 2008 (assuming that the Offer
Document is despatched on 15 February
2008)
Listing of the New Peace Mark Shares Under the Singapore Takeovers Code, the
Offer Consideration has to be paid within ten
days after (a) the Offer becomes or is declared
unconditional in all respects, or (b) receipt
of valid acceptances where such acceptances
are tendered after the Offer has become or
been declared unconditional in all respects.
The New Peace Mark Shares which would
be issued to Sincere Watch shareholders who
accept the Offer are expected to be listed as
soon as the Offer becomes unconditional in
all respects.
3.9 Shareholding structure of the Company before and after the Offer
The current shareholding structure of the Company and Sincere Watch are displayed
diagrammatically as follows:
25%
Peace Mark
(listed in Hong Kong)
100%
Peace Mark (B.V.I.)
Ltd (BVI company)
Major Shareholder
Sincere Watch
(listed in Singapore)
50.67%
Sincere Watch HK
(listed in Hong Kong)
75%
Public
Public
100 %
A-A United Limited
(BVI company)

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LETTER FROM THE COMPANY

Assuming the Offer proceeds, the shareholding structure of the Company immediately
after the Offer would be displayed diagrammatically as follows:
75%
remainder (in respect of
Sincere Watch Shares
(if any) not acquired
pursuant to the Offer)
100%
50.67% to 100%
A-A United Limited
(BVI company)
Sincere Watch
(listed in Singapore)
Sincere Watch HK
(listed in Hong Kong)
Major Shareholder
Peace Mark (B.V.I.)
Ltd (BVI company)
75%
100%
25%
Peace Mark
(listed in Hong Kong)
Public
Public
Public

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LETTER FROM THE COMPANY

The following table sets out the percentage shareholdings in the Company as at the date
of this Circular and after the Offer (assuming 100 per cent. acceptance of the Offer):
Number and
Percentage of
shares in the
Company held
after the Offer
(assuming the
Number and maximum number
Percentage of of New Peace
shares in the Mark Shares
Company held is issued as 20%
at the date of of the Offer
Shareholders of the Company this Circular Consideration)
A-One Investments Limited 298,0,459 298,0,459
(28.5%) (27.41%)
(see Note 1)
United Success Enterprises Limited 28,41,795 28,41,795
(2.73%) (2.1%)
(see Note 2)
Mr. Chau Cham Wong, Patrick 5,31,077 5,31,077
(.3%) (.02%)
Lloyd George Investment Management 53,792,000 53,792,000
(Bermuda) Ltd (5.1%) (4.94%)
(see Note 3)
Public 595,983,949 595,983,949
(57.1%) (54.9%)
The 25% minimum
public float will be
maintained
Major Shareholder N/A 23,87,002
(2.19%)
Sincere Watch shareholders N/A 23,247,289
(2.13%)

Total 1,042,484,280 1,089,607,571
(100%) (100%)

- 1 -
LETTER FROM THE COMPANY

Notes:
1. A-One Investments Limited is held as to 50.45 per cent. by Mr. Chau Cham Wong, Patrick (the Chairman
of the Company) and as to 49.55 per cent. by Mr. Leung Yung (the Chief Executive Officer of the
Company).
2. United Success Enterprises Limited is wholly-owned by Mr. Leung Yung (the Chief Executive Officer
of the Company).
3. Lloyd George Investment Management (Bermuda) Ltd is interested in 5.1 per cent. of the shares in the
Company as an investment manager.
The completion of the Offer and issue of the New Peace Mark Shares as part of the Offer
Consideration will not result in a change of control of Peace Mark.
4. MANAGEMENT

In the event the Offer completes, it is proposed that Mr. Tay, the Chief Executive Officer and
Group Managing Director of Sincere Watch, Chairman of Sincere Watch HK and the legal and beneficial
owner of the Major Shareholder, shall be appointed as an executive director of the Company. Mr. Tay
has no existing relationship with the Peace Mark Group.
It is the intention and desire of Peace Mark to retain Mr. Tay as the Chief Executive Officer and
Group Managing Director of Sincere Watch to facilitate the continued growth and expansion of Sincere
Watch. So far as the Company is aware, at the Latest Practicable Date, Mr. Tay and parties acting
or presumed to be acting in concert (within the meaning ascribed to that term under the Singapore
Takeovers Code) with Mr. Tay hold no Peace Mark Shares. Peace Mark (through the Offeror) will
seek to procure the following, subject to completion of the Offer:
(i) Sincere Watch and Mr. Tay will agree to extend Mr. Tay’s service agreement with Sincere
Watch for a period of up to three years from the date of completion of the Offer based on
substantially the same terms as Mr. Tay’s current service agreement with Sincere Watch;
and
(ii) Sincere Watch HK and Mr. Tay will agree to extend Mr. Tay’s service agreement with
Sincere Watch HK for a period of up to three years from the date of completion of the
Offer based on substantially the same terms as Mr. Tay’s current service agreement with
Sincere Watch HK.
The proposals above have not been discussed with Sincere Watch and Sincere Watch HK and
will be subject to discussions between Mr. Tay and Sincere Watch and Sincere Watch HK respectively.
None of the other directors of Sincere Watch are to be appointed as a director of Peace Mark.
As at the Latest Practicable Date, there is no agreement, arrangement or understanding for any
payment or other benefit to be made or given to any director of Sincere Watch or of any corporation
which is by Section of the Companies Act, Chapter 50 of Singapore, deemed to be related to Sincere
Watch as compensation for loss of office or otherwise in connection with the Offer.

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LETTER FROM THE COMPANY

As at the Latest Practicable Date, there is no agreement, arrangement or understanding between
the Offeror or its Concert Parties and any director of the Offeror, whereby the total emoluments
received by directors of the Offeror will be affected as a consequence of the Offer.
It is intended that Peace Mark will appoint at least one director to the board of Sincere Watch,
however at this stage the number and identity of such director(s) have not been confirmed.
5. FINANCING OF THE OFFER

The cash element of the Offer Consideration will be financed by a combination of the Company’s
internal resources and external bank borrowing or an equity fund raising, which will be confirmed at
the time of making the Offer Announcement. The Company is currently in discussions with relevant
finance parties.
6. THE OFFEROR’S INTENTIONS FOR SINCERE WATCH
The Offeror intends for Sincere Watch to continue with its existing activities and has no
current intention to (i) introduce any major changes to the business of Sincere Watch, (ii) redeploy
Sincere Watch’s fixed assets, (iii) affect the operations of any of its subsidiaries, or (iv) discontinue
the employment of any of the existing employees of Sincere Watch and its subsidiaries, other than
in the ordinary course of business.
As the Offeror’s intention is to acquire a controlling shareholding interest in Sincere Watch
and to maintain the present listing status of Sincere Watch on the Main Board of the SGX-ST, the
Offeror does not intend to avail itself of powers of compulsory acquisition pursuant to Section 215
of the Companies Act, Chapter 50 of Singapore.
As at the Latest Practicable Date, there is no agreement, arrangement or understanding whereby
any Sincere Watch Shares acquired by the Offeror pursuant to the Offer will be transferred to any
other person.
7. REASONS FOR THE OFFER

The Board believes that the proposed transaction provides Peace Mark with an opportunity to
complement and further develop its existing business by extending its geographic reach, expanding its
existing luxury retail network and expanding its management team. It is expected over time that the
combination of these factors will allow Peace Mark to increase the pace of expansion of its luxury
retail operations in the PRC and Hong Kong, as well as enjoying greater customer and supplier
recognition and economies of scale.
With respect to geographic reach, Sincere Watch presently operates luxury watch retail shops
in several markets where Peace Mark has no existing operations, namely Singapore, Malaysia,
Thailand, India, Australia, South Korea and Indonesia. Peace Mark believes each of these markets
offer positive growth prospects for the Peace Mark Group and an exposure to these markets is in line
with Peace Mark’s strategy of being a major regional player in the south-east Asian luxury watch
retail segment.

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LETTER FROM THE COMPANY

In terms of brand portfolio, Sincere Watch currently carries a portfolio of over 40 internationally
acclaimed brands and has exclusive agency rights for 15 brands within certain territories, notably
Franck Muller, de GRISOGONO, A. Lange & Shne, and F.P. Journe. Peace Mark currently has no
involvement with these brands. Accordingly, completion of the Offer will allow Peace Mark to expand
its brand reach and develop new relationships with leading watch makers.
Finally, Peace Mark’s major revenue contribution to date has been from watch manufacturing
and watch retail. While the Company has some existing operations in the luxury segment, these are not
presently of the scale that the Peace Mark Group would like and the Company believes the proposed
transaction with Sincere Watch will allow it to increase its exposure to the luxury segment on a
larger scale and within a shorter timeframe than would be possible through organic expansion. A key
related element of this is the combined management depth of Peace Mark and Sincere Watch which
the Board believes is complementary. In particular, the knowledge that Sincere Watch’s management
has developed in the building of luxury watch brands and the operation of luxury watch retail stores
will be of significant benefit in helping Peace Mark to expand its operation of luxury watch retail
stores in Mainland China.
In the event that the Offer proceeds and completes, the current intention is for Sincere Watch to
remain focused on the retail of luxury timepieces in south-east Asia and other new markets like India,
while Sincere Watch HK will focus on brand management and the operation of its luxury retail outlets
in Hong Kong. Peace Mark’s focus will remain on retail expansion, especially in Mainland China.
8. RISKS IN RELATION TO THE OFFER

Shareholders and potential investors should note that the making of the Offer is subject to
satisfaction of the Pre-conditions and that the Offer, if made, may not be successful and may not
complete.
There can be no assurance that shareholders of Sincere Watch other than the Major Shareholder
will tender their Sincere Watch Shares in acceptance of the Offer.
If the Offer lapses or is otherwise terminated (as may be permitted under the Singapore Takeovers
Code or by the SIC), the Offeror will not hold any shares in Sincere Watch.
Shareholders and investors are advised to exercise caution when dealing in the securities of
Peace Mark, the securities of Sincere Watch and the securities of Sincere Watch HK.
In the event the Offer proceeds and completes, Peace Mark intends to maintain Sincere Watch’s
listing on the SGX-ST. Accordingly, the Offeror and/or Peace Mark will take steps to restore the
minimum public float so that Sincere Watch meets the requirement under the Listing Manual of the
SGX-ST that the proportion of issued Sincere Watch Shares held by members of the public must be
at least ten per cent., in the event that the Offeror and its Concert Parties end up holding more than
90 per cent. of the issued Sincere Watch Shares pursuant to the Offer.

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LETTER FROM THE COMPANY
9. BUSINESS OF SINCERE WATCH AND SINCERE WATCH HK

9.1 Business of Sincere Watch
Sincere Watch was incorporated in Singapore on 10 May 1977. It has been listed on SGX
Sesdaq since 2 September 1993 and subsequently on the SGX-ST since 1 February 2005.
Sincere Watch is the holding company in the Sincere Watch Group. The Sincere Watch
Group is one of Singapore’s oldest and most established retailers and distributors of brand-
name luxury watches, with a network spanning Singapore, Malaysia, Thailand, Hong Kong,
Mainland China, India, Australia, South Korea, Indonesia and other countries in both south-
east and north-east Asia. Sincere Watch’s businesses include brand management, fine watch
retailing, travel watch retailing and lifestyle watch retailing. The Sincere Watch Group now
carries a portfolio of over 40 internationally acclaimed brands and enjoys exclusive agency
rights for 15 brands within certain territories, such as Franck Muller, de GRISOGONO, A.
Lange & Shne and F.P. Journe.
The Sincere Watch Group also operates a food and beverages business through its wholly-
owned subsidiaries Culina Holdings Pte Limited and Culina Pte Limited (together, “Culina”)
and Food Resources Pte Ltd (“Food Resources”). Culina has distributed fine food and beverages
for the Sincere Watch Group since its establishment in 1994. Culina has two gourmet shops
and is one of the largest suppliers of imported premium food and beverages to hotels, retail
stores and restaurants throughout Singapore. Food Resources was acquired by the Sincere Watch
Group in 200 and distributes fast moving consumables such as beverages, fruit and vegetable
juices, ice cream and other frozen desserts and frozen foods. Unlike Culina, Food Resources
focuses its channels of distribution on convenience stores and supermarkets.
As at December 2007, Sincere Watch had a market capitalisation of approximately
S$479.5 million. The audited consolidated net profit of Sincere Watch for the financial year
ended 31 March 2007 was approximately S$25.385 million after tax (representing approximately
HK$13.98 million at the Exchange Rate on December 2007) and S$30.733 million before
tax (representing approximately HK$15.497 million at the Exchange Rate on December 2007)
and the audited consolidated net profit of Sincere Watch for the financial year ended 31 March
200 was approximately S$35.09 million after tax (representing approximately HK$188.992
million at the Exchange Rate on December 2007) and S$42.252 million before tax (representing
approximately HK$227.527 million at the Exchange Rate on December 2007), respectively.
The audited consolidated net assets of Sincere Watch as at 31 March 200 and 31 March 2007
were approximately S$131.92 million (representing approximately HK$709.11 million at
the Exchange Rate on December 2007) and S$135.800 million (representing approximately
HK$731.283 million at the Exchange Rate on December 2007), respectively.
9.2 Business of Sincere Watch HK
Sincere Watch HK is a subsidiary of Sincere Watch listed on the Stock Exchange, and
is engaged in the brand management, marketing and distribution of branded fine watches,
timepieces and accessories in Hong Kong, Macau, Taiwan and Mainland China.

- 20 -
LETTER FROM THE COMPANY

The Company wrote to the Executive of the Securities and Futures Commission of Hong
Kong on 17 October 2007 requesting a ruling that the Company is not required to make a
mandatory general offer for Sincere Watch HK as a result of the chain principle under Note
8 to Rule 2.1 of the Hong Kong Code on Takeovers and Mergers. Based on the submissions
and the representations made by the Company, the Executive confirmed on 29 October 2007
that the Company was not required to make a mandatory general offer for Sincere Watch HK
in Hong Kong.
9.3 Chrono Star Divestment
Peace Mark understands that the Sincere Watch Board have announced that Sincere Watch
entered into a conditional sale and purchase agreement on 3 January 2008 (the “Chrono Star
Agreement”) with Mr. Tay pursuant to which Sincere Watch has agreed to sell, and Mr. Tay
has agreed to purchase, an aggregate of 175,000 existing ordinary shares in Chrono Star (the
“Chrono Star Shares”) for an aggregate consideration of S$10,957,49 (the “Chrono Star
Divestment”).
Chrono Star is a private limited company incorporated in Luxembourg and the parent
company for the Franck Muller group, whose principal activities involve owning and operating
the Franck Muller brand (amongst other brands). As at 3 January 2008, 175,000 ordinary shares
in the capital of Chrono Star represent one per cent. of the existing total number of issued
Chrono Star shares. As at 3 January 2008, Chrono Star had an issued share capital of 35,000,000
Swiss Francs divided into 17,500,000 ordinary shares.
Sincere Watch had appointed Sallmanns (Far East) Limited as independent valuer to
determine the market value of the Chrono Star Shares, but on 31 December 2007 Sallmanns (Far
East) Limited issued a report stating that they were unable to perform a valuation to reliably
estimate the market value of the Chrono Star Shares because there was limited information
available from Chrono Star and they were unable to obtain the necessary information to fulfill
the requirements for an independent assessment of the market value of the Chrono Star Shares.
Accordingly, the consideration is based on one per cent. of the latest available audited book
value of Chrono Star of 83,400,000 Swiss Francs as at 31 December 200, being 8,34,000
Swiss Francs, calculated at the exchange rate of 1.291 Singapore Dollars to one Swiss Franc
(the simple average of the exchange rates of Singapore Dollars to Swiss Francs quoted by
Bloomberg over the 20-day period preceding the date of the Chrono Star Agreement). This is
above the price paid by Sincere Watch when it acquired the Chrono Star Shares, therefore the
Sincere Watch Board is of the view that the consideration represents a reasonable return on the
investment made by Sincere Watch in Chrono Star.
The obligations of Sincere Watch and Mr. Tay under the Chrono Star Agreement are
conditional upon the following:
(a) the approval of the shareholders of Sincere Watch being obtained at an extraordinary
general meeting to be convened for the purpose of approving the sale of the Chrono
Star Shares by Sincere Watch to Mr. Tay. (Pursuant to Chapter 9 of the Listing
Manual of the SGX-ST, the approval of Sincere Watch’s shareholders is required to
be obtained if the value of the Chrono Star Shares is equal to or exceeds S$,117,250
(being five per cent. of S$122,345,000, the audited consolidated value of the net
tangible assets of Sincere Watch as at 31 March 2007). As the consideration of
S$10,957,49 for the Chrono Star Shares exceeds the relevant financial threshold
of S$,117,250, the Chrono Star Divestment is subject to the approval of Sincere
Watch’s shareholders);

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LETTER FROM THE COMPANY

(b) the Offer becoming or being declared unconditional as to acceptances; and
(c) such waivers or consents as may be necessary to enable Mr. Tay and/or his nominee(s)
to be registered in the register of members of Sincere Watch as holders of any and
all of the Chrono Star Shares.
If any of the aforesaid conditions shall not be fulfilled on or before 2 April 2008 or
such other date as Sincere Watch and Mr. Tay shall mutually agree in writing, the Chrono Star
Agreement shall terminate.
Peace Mark understands from Mr. Tay that Chrono Star had indicated that if the Major
Shareholder ceased to be the controlling shareholder of Sincere Watch, it would prefer Mr. Tay to
acquire the Chrono Star Shares, which Sincere Watch had acquired in December 2005 from Mr.
Muller, one of the major shareholders in Chrono Star. The Chrono Star Shares were originally
personally offered to Mr. Tay by the major shareholders of Chrono Star, who were agreeable to
the Chrono Star Shares being held by Sincere Watch while the Major Shareholder was a major
shareholder in Sincere Watch. Peace Mark has no existing interest in Chrono Star.
Mr. Tay is an existing director of Chrono Star. It should be noted that Mr. Muller and
the other major shareholders in Chrono Star have pre-emptive rights in respect of the Chrono
Star Shares held by Sincere Watch, but such pre-emptive rights would be waived upon the
completion of the transfer of Sincere Watch’s interest in Chrono Star to Mr. Tay.
The SIC has ruled that the Chrono Star Divestment does not constitute a special deal for
the purpose of Rule 10 of the Singapore Takeovers Code, subject to the independent financial
adviser to Sincere Watch publicly stating that the terms of the Chrono Star Divestment are fair
and reasonable in its opinion. Sincere Watch has appointed Kim Eng Capital Pte. Ltd. to be
the independent financial adviser to advise the directors of Sincere Watch who do not have an
interest in the Chrono Star Divestment on whether the Chrono Star Divestment is on normal
commercial terms and whether it is prejudicial to the interests of Sincere Watch and its minority
shareholders. Peace Mark understands that a circular containing further details of the Chrono
Star Divestment and the opinion of Kim Eng Capital Pte. Ltd. and the audit committee of Sincere
Watch, and enclosing a notice of extraordinary general meeting in connection therewith, will
be despatched to Sincere Watch’s shareholders in due course.
At this stage, the parties do not know when the Chrono Star Divestment will complete.
However, in the event that the Chrono Star Divestment completes, among other things, after
completion of the Offer and the appointment of Mr. Tay as an executive director of the Company,
the Company will comply with the relevant Listing Rules. As at the Latest Practicable Date,
the Company is not aware of any further material developments in the Chrono Star Divestment
since the announcement by Sincere Watch on 3 January 2008 that it had entered into the Chrono
Star Agreement.
10. BUSINESS OF THE OFFEROR

The Peace Mark Group is a Hong Kong-based mid to luxury timepiece company with operations
mainly located in Hong Kong and Mainland China.

- 22 -
LETTER FROM THE COMPANY

The Peace Mark Group has expanded its business worldwide over the years since its founding
in 1983. With strong design capability, the Peace Mark Group manufactures, distributes and sells
international brand name timepieces to major markets including the United States of America, Europe,
the PRC and other Asian countries. In the case of brands sold in the PRC, Peace Mark operates a
number of service stores which provide after-sales services.
Headquartered in Hong Kong, Peace Mark boasts an extensive fashion watch retail network for
the mid-range market in the Greater China Region, for instance through its TimeZone retail stores, as
well as the Peace Mark Tourneau joint-venture and strategic partnerships with local players leading the
retailing business of luxury watches in Mainland China. The Peace Mark Group has also diversified
and expanded into the high-end jewellery market as it now operates two Boucheron stores in Hong
Kong and Shanghai under franchise arrangement (Boucheron being a French high jewellery brand
under the Gucci Group). Its advanced production facilities are located in (i) Hong Kong, (ii) Shenzhen
and Shanghai in the PRC and (iii) Bienne in Switzerland, and the Peace Mark Group employs more
than 10,000 staff.
The Offeror is a company incorporated in the British Virgin Islands and is an indirect wholly-
owned subsidiary of the Company. Its principal activities are that of an investment holding company
and it has no business other than to make the Offer.
11. FINANCIAL INFORMATION AND WAIVERS FROM THE STOCK EXCHANGE

Given the structure of the Offer, and, in particular, the need to maintain confidentiality prior to
the Announcement and the Pre-conditional Offer Announcement being made, it has not been possible
to gain access to such financial and other records/information of the Sincere Watch Group prior to
the Latest Practicable Date as is required in order to comply fully with the disclosure requirements
under the Listing Rules in relation to the inclusion of certain financial and other information of the
Sincere Watch Group in this Circular.
For the purposes of this Circular, Peace Mark has extracted the published audited consolidated
financial statements of the Sincere Watch Group prepared under SFRS, for the three consecutive years
ended 31 March 2007 and the published unaudited consolidated financial statements of the Sincere
Watch Group for the six months periods ended 30 September 200 and 30 September 2007. Peace
Mark, however, is unable to comply with the following Listing Rules requirements in respect of the
disclosure of the following information as at the date of this Circular:
(a) an accountants’ report on the Sincere Watch Group prepared using accounting policies
which are materially consistent with those of the Peace Mark Group (Rule 14.7(4)(a)(i)
of the Listing Rules);
(b) a pro forma statement of the assets and liabilities of the Enlarged Group on the same
accounting basis and in compliance with Chapter 4 of the Listing Rules (Rule 14.7(4)(a)(ii)
of the Listing Rules);
(c) an indebtedness statement as at the Latest Practicable Date of the Enlarged Group (Rule
14.(2) and paragraph 28 and note 2 of Appendix 1B of the Listing Rules);

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LETTER FROM THE COMPANY

(d) a statement by the Directors that in their opinion the working capital as at the Latest
Practicable Date available to the Enlarged Group is sufficient or, if not, how it is proposed
the additional working capital thought by the directors to be necessary will be made
available (Rules 14.(2) and 14.(4) and paragraph 30 and note 2 of Appendix 1B of
the Listing Rules);
(e) the dates of and parties to all material contracts entered into by any member of the
Enlarged Group within the two years immediately preceding the issue of this Circular
together with a summary of the principal contents of such contracts and particulars of
any consideration passing to or from any member of the Enlarged Group and inspection
of such contracts (Rule 14.(2), paragraphs 42 and 43(2)(b) and note 2 of Appendix 1B
of the Listing Rules);
(f) particulars of any litigation or claims of material importance pending or threatened
against any member of the Enlarged Group (Rule 14.4(2) and paragraph 33 and note 2
to Appendix 1B of the Listing Rules); and
(g) a management discussion and analysis of the results of the Sincere Watch Group covering
all those matters set out in paragraph 32 of Appendix 1 of the Listing Rules for the
period reported in the accountants’ report (Rule 14.7(5) and paragraph 32 of Appendix
1 of the Listing Rules).
(Paragraphs (b) to (g) above are collectively defined as the “Further Information”)
The Company applied to the Stock Exchange for a waiver from strict compliance with the
disclosure requirements of the Listing Rules set out in paragraphs (a) to (g) above and on 30 November
2007 the Stock Exchange indicated, in writing, that it was minded to grant a waiver to the Company
from such requirements subject to the following conditions:
(a) this Circular contains:
(i) a statement of indebtedness of the Peace Mark Group (as included in Appendix I
to this Circular);
(ii) a statement by the Directors that in their opinion the working capital available to
the Peace Mark Group is sufficient (as included in Appendix I to this Circular);
(iii) the published audited financial statements of Sincere Watch for each of the three
years ended 31 March 2005, 31 March 200 and 31 March 2007 (as included in
Appendix II of this Circular);
(iv) the published unaudited financial statements of Sincere Watch for each of the six
month periods ended 30 September 200 and 30 September 2007 (as included in
Appendix II of this Circular);

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LETTER FROM THE COMPANY

(v) a qualitative explanation of the differences in accounting practices between HKFRS
and SFRS which may have a material impact on the financial statements of Sincere
Watch (as included in Appendix V to this Circular);
(vi) a statement of the assets and liabilities of the Sincere Watch Group as shown in
its published unaudited interim accounts for the six months ended 30 September
2007 under SFRS and a statement of the assets and liabilities of the Peace Mark
Group for the six months ended 30 September 2007 under HKFRS (as included in
Appendix I, II and III to this Circular);
(vii) details of any litigation or claims of material importance pending or threatened
against any member of each of the Peace Mark Group and the Sincere Watch
Group (or an appropriate negative statement) (as included in Appendix VI to this
Circular);
(viii) all material contracts (not being contracts entered into in the ordinary course of business)
entered into by the Peace Mark Group within the two years immediately preceding
the issue of this Circular (as included in Appendix VI to this Circular);
(ix) other material information relating to Sincere Watch which is in the public domain
or made available by Sincere Watch and which the Company is aware of and free
to disclose (as included in Appendix VI to this Circular); and
(x) the reasons why access to books and records of Sincere Watch has not been granted
to the Company; and
(b) the Company issues a supplemental circular within 45 days of the earlier of the date
when the Company is able to exercise control over Sincere Watch or gain access to the
books and records of Sincere Watch, and in any event on or before 31 March 2008. The
supplemental circular will include the following information:
(i) an accountant’s report of the Sincere Watch Group for each of the three years
ended 31 March 2005, 31 March 200 and 31 March 2007 and for each of the six
months ended 30 September 200 and 30 September 2007 prepared under IFRS
or HKFRS in accordance with Chapter 4 and Rule 14.7(4)(a)(i) of the Listing
Rules; and
(ii) the Further Information.

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LETTER FROM THE COMPANY
12. GENERAL

To the best of the Board’s knowledge, having made all reasonable enquiries, Sincere Watch, the
Major Shareholder, Mr. Tay, the legal and beneficial owner of the Major Shareholder and the other
shareholders of Sincere Watch are Unconnected Persons. Each of the Company and the Major Shareholder
have submitted to the SIC a letter confirming that they are not parties acting or presumed to be acting
in concert (within the meaning ascribed to that term under the Singapore Takeovers Code).
No Shareholders are required to abstain from voting at the Special General Meeting in connection
with the Offer.
Shareholders and potential investors should note that the making of the Offer is subject
to the Pre-conditions being satisfied and the Offer, if made, is also subject to certain conditions
being satisfied, therefore the Offer may not be successful and may not complete. Shareholders
and investors are advised to exercise caution when dealing in the securities of the Company, the
securities of Sincere Watch and the securities of Sincere Watch HK.
13. SPECIAL GENERAL MEETING

A notice convening the Special General Meeting to be held at The President and Chairman room,
World Trade Centre Club, 38th Floor, World Trade Centre, 280 Gloucester Road, Causeway Bay, Hong
Kong on Friday, 1 February 2008 at 10:00 a.m. is set out on pages 300 and 301 of this Circular. At
the Special General Meeting, four ordinary resolutions relating to the Offer will be proposed. The
first will be to approve the making of the Offer by the Offeror, subject to the satisfaction of the Pre-
Conditions. The second will be to approve the Company’s participation in the Offer. The third will
be to authorise any Director to take any action on behalf of the Company he may consider necessary,
desirable or expedient in connection with the Offer. And the fourth will be to authorise, approve and,
to the extent necessary, ratify and confirm any and all past actions by the Directors which they may
deem or have deemed useful, necessary or expedient with respect to any of the matters contemplated
by the resolutions.
A form of proxy for use at the Special General Meeting is enclosed. Whether or not the
Shareholders are able to attend the meeting, they are requested to complete and return the enclosed
form of proxy to Tricor Secretaries Limited at 2th Floor, Tesbury Centre, 28 Queen’s Road East,
Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time
appointed for the holding of the meeting. Completion and return of the form of proxy will not preclude
the Shareholders from attending and voting at the meeting should they wish to do so.
14. RECOMMENDATION

The Board believes the terms of the Offer to be fair and reasonable and in the interests of all
the Shareholders and recommends the Shareholders to vote in favour of the ordinary resolutions to
be proposed at the Special General Meeting for approving, among other things, the Offer.

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LETTER FROM THE COMPANY
15. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the following appendices to
this Circular:
(i) Appendix I – Peace Mark Group Financial Information;
(ii) Appendix II – Sincere Watch Group Financial Information;
(iii) Appendix III – Statement of Assets and Liabilities of the Peace Mark Group and the
Sincere Watch Group;
(iv) Appendix IV – Financial Information relating to the Enlarged Group;
(v) Appendix V – Differences between Hong Kong Financial Reporting Standards and
Singapore Financial Reporting Standards; and
(vi) Appendix VI – General Information.
Yours faithfully,
For and on behalf of the Board of
Directors of
Peace Mark (Holdings) Limited
Mr. Chau Cham Wong, Patrick
Chairman

- 27 -
APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION
A SUMMARY OF FINANCIAL INFORMATION OF THE PEACE MARK GROUP

The following is a summary of the consolidated financial information for the three financial
years ended 31 March 2007 extracted from the audited financial statements of the Peace Mark Group
for the years ended 31 March 2006 and 31 March 2007 which are not qualified.
Consolidated Balance Sheet
As at 31 March 2007
2007 2006 2005

HK$’000 HK$’000 HK$’000
(As restated)
Non-current assets
Property, plant and equipment 518,010 401,288 457,529
Freehold land and interest in leasehold land 7,961 5,461 21,256
Intangible assets 239,289 196,143 201,624
Interest in associates 87,300 134,533 65,375
Interest in a jointly controlled entity 15,994 13,776 15,640
Investments in securities – – 16,768
Other financial assets 181,057 44,941 29,225
Deferred tax assets 9,566 9,224 12,577

1,059,177 805,366 819,994

Current assets
Inventories 1,015,963 654,417 513,300
Derivative financial instruments 46,282 17,119 –
Other financial assets at fair value
through profit or loss 6,585 9,364 –
Trade receivables 613,776 318,849 276,038
Trade deposits and other receivables 266,718 280,783 119,402
Cash and bank balances 1,460,091 1,185,789 666,167

3,409,415 2,466,321 1,574,907

Current liabilities
Trade and other payables 294,789 385,057 220,094
Derivative financial instruments 24,023 9,932 –
Interest-bearing borrowings 988,231 547,240 671,570
Obligations under finance leases 200 1,195 2,918
Tax payable 33,878 37,853 21,974

1,341,121 981,277 916,556

Net current assets 2,068,294 1,485,044 658,351

Total assets less current liabilities 3,127,471 2,290,410 1,478,345

Non-current liabilities
Interest-bearing borrowings 1,077,727 609,914 269,140
Obligations under finance leases 142 206 1,651
Deferred tax liabilities 13,064 11,392 15,314

1,090,933 621,512 286,105

Net assets 2,036,538 1,668,898 1,192,240

Capital and reserves
Share capital 99,308 98,974 86,808
Reserves 1,707,171 1,462,351 1,020,620

Equity attributable to equity holders of
the Company 1,806,479 1,561,325 1,107,428

Minority interests 230,059 107,573 84,812

Total equity 2,036,538 1,668,898 1,192,240

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APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

Consolidated Income Statement
For the year ended 31 March 2007
2007 2006 2005

HK$’000 HK$’000 HK$’000
(As restated)
Turnover 3,040,514 2,241,771 1,937,947
Cost of sales (2,055,700 ) (1,544,183 ) (1,398,828 )

Gross profit 984,814 697,588 539,119
Other revenue 132,846 80,444 22,864
Selling and distribution expenses (363,782 ) (261,145 ) (181,738 )
Administrative and general expenses (283,896 ) (185,650 ) (188,065 )
Other operating expenses (13,644 ) (17,806 ) (11,096 )

Profit from operations 456,338 313,431 181,084
Share of (loss) profit of associates (9,512 ) 2,974 (357 )
Share of loss of a jointly controlled entity (2,027 ) (2,134 ) (929 )
Finance costs (111,880 ) (60,346 ) (27,439 )

Profit before taxation 332,919 253,925 152,359
Taxation (28,316 ) (37,924 ) (23,158 )

Profit for the year 304,603 216,001 129,201

Attributable to:
Equity holders of the Company 300,276 200,619 123,917
Minority interests 4,327 15,382 5,284

304,603 216,001 129,201

Dividends 102,727 69,572 43,106

Earnings per share for profit attributable
to equity holders of the Company
during the year
Basic (HK cents) 30.28 22.13 14.90

Diluted (HK cents) 29.54 22.03 14.49

- 29 -
APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION
B AUDITED FINANCIAL INFORMATION

The following are the audited financial statements of the Peace Mark Group for the financial
year ended 31 March 2007 extracted from the published annual financial statements of the Peace
Mark Group for the year ended 31 March 2007 which are not qualified.
Consolidated Balance Sheet
As at 31 March 2007
2007 2006

Note HK$’000 HK$’000
Non-current assets
Property, plant and equipment 17 518,010 401,288
Freehold land and interest in leasehold land 16 7,961 5,461
Intangible assets 18 239,289 196,143
Interest in associates 20 87,300 134,533
Interest in a jointly controlled entity 21 15,994 13,776
Other financial assets 22 181,057 44,941
Deferred tax assets 31 9,566 9,224

1,059,177 805,366

Current assets
Inventories 23 1,015,963 654,417
Derivative financial instruments 26 46,282 17,119
Other financial assets at fair value
through profit or loss 27 6,585 9,364
Trade receivables 24 613,776 318,849
Trade deposits and other receivables 25 266,718 280,783
Cash and bank balances 1,460,091 1,185,789

3,409,415 2,466,321

Current liabilities
Trade and other payables 28 294,789 385,057
Derivative financial instruments 26 24,023 9,932
Interest-bearing borrowings 29 988,231 547,240
Obligations under finance leases 30 200 1,195
Tax payable 33,878 37,853

1,341,121 981,277

Net current assets 2,068,294 1,485,044

Total assets less current liabilities 3,127,471 2,290,410

Non-current liabilities
Interest-bearing borrowings 29 1,077,727 609,914
Obligations under finance leases 30 142 206
Deferred tax liabilities 31 13,064 11,392

1,090,933 621,512

Net assets 2,036,538 1,668,898

Capital and reserves
Share capital 32 99,308 98,974
Reserves 33 1,707,171 1,462,351

Equity attributable to equity holders of
the Company 1,806,479 1,561,325

Minority interests 230,059 107,573

Total equity 2,036,538 1,668,898

- 30 -
APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

Balance Sheet
As at 31 March 2007
2007 2006

Note HK$’000 HK$’000
Non-current assets
Interest in subsidiaries 19 2,297,523 1,800,986

Current assets
Other receivables 41,186 38,167
Derivative financial instruments 26 14,744 1,630
Cash and bank balances 94,047 60,416

149,977 100,213

Current liabilities
Accruals and other payables 9,797 265
Derivative financial instruments 26 1,872 –
Interest-bearing borrowings 29 416,000 166,050
Tax payable 1,539 –

429,208 166,315

Net current liabilities (279,231 ) (66,102 )

Total assets less current liabilities 2,018,292 1,734,884

Non-current liabilities
Interest-bearing borrowings 29 804,000 570,000

Net assets 1,214,292 1,164,884

Capital and reserves
Share capital 32 99,308 98,974
Reserves 33 1,114,984 1,065,910

Total equity 1,214,292 1,164,884

- 31 -
APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

Consolidated Income Statement
For the year ended 31 March 2007
2007 2006

Note HK$’000 HK$’000
Turnover 7 3,040,514 2,241,771
Cost of sales (2,055,700 ) (1,544,183 )

Gross profit 984,814 697,588
Other revenue 7 132,846 80,444
Selling and distribution expenses (363,782 ) (261,145 )
Administrative and general expenses (283,896 ) (185,650 )
Other operating expenses (13,644 ) (17,806 )

Profit from operations 456,338 313,431
Share of (loss) profit of associates (9,512 ) 2,974
Share of loss of a jointly controlled entity (2,027 ) (2,134 )
Finance costs 9 (111,880 ) (60,346 )

Profit before taxation 8 332,919 253,925
Taxation 11 (28,316 ) (37,924 )

Profit for the year 304,603 216,001

Attributable to:
Equity holders of the Company 12 300,276 200,619
Minority interests 4,327 15,382

304,603 216,001

Dividends 13 102,727 69,572

Earnings per share for profit attributable to
equity holders of the Company during the year 14
Basic (HK cents) 30.28 22.13

Diluted (HK cents) 29.54 22.03

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APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

Consolidated Statement of Changes in Equity
For the year ended 31 March 2007
Attributable to
equity holders of
the Company

Share Minority
capital Reserves interests Total
Note HK$’000 HK$’000 HK$’000 HK$’000
Balance at 1 April 2005 86,808 1,020,983 84,812 1,192,603

Fair value adjustment of
available-for-sale financial assets – (146 ) – (146 )
Exchange realignment – (4,761 ) – (4,761 )

Net loss recognized directly in equity – (4,907 ) – (4,907 )
Profit for the year – 200,619 15,382 216,001

Total recognized income for the year – 195,712 15,382 211,094

Disposal of subsidiaries – 7,310 – 7,310
Share-based payment – 3,588 – 3,588
Issue of new shares for subscription 9,000 276,919 – 285,919
Issue of new shares pursuant to
the exercise of warrants 3,763 20,693 – 24,456
Shares repurchased and cancelled (597 ) (10,502 ) – (11,099 )
Dividend paid during the year – (52,352 ) – (52,352 )
Increase in investment from
minority interests – – 4,874 4,874
Minority interests arising from
acquisition of subsidiaries – – 2,505 2,505

12,166 245,656 7,379 265,201

Balance at 31 March 2006 98,974 1,462,351 107,573 1,668,898

Balance at 1 April 2006 98,974 1,462,351 107,573 1,668,898

Fair value adjustment of
available-for-sale financial assets – (171 ) – (171 )
Exchange realignment – 220 – 220

Net gain recognized directly in equity – 49 – 49
Profit for the year – 300,276 4,327 304,603

Total recognized income for the year – 300,325 4,327 304,652

Share-based payment – 20,935 – 20,935
Issue of new shares pursuant to
the exercise of options 32 334 6,941 – 7,275
Dividend paid during the year – (83,381 ) – (83,381 )
Acquisition of minority interests
in subsidiaries – – (10,560 ) (10,560 )
Increase in investment from
minority interests – – 123,057 123,057
Minority interests arising from
acquisition of subsidiaries – – 5,662 5,662

334 (55,505 ) 118,159 62,988

Balance at 31 March 2007 99,308 1,707,171 230,059 2,036,538

- 33 -
APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

Consolidated Cash Flow Statement
For the year ended 31 March 2007
2007 2006

Note HK$’000 HK$’000
Operating activities
Profit from ordinary activities before taxation 332,919 253,925
Adjustments for:
Depreciation of property, plant and equipment 70,508 70,802
Amortization of land lease premium 141 103
Impairment loss on intangible assets 12,484 7,133
Interest expenses 111,880 60,346
Interest income (64,293 ) (42,039 )
Share-based payment 20,935 3,588
Gain on fair value adjustment on
derivative financial instruments (15,072 ) (5,657 )
Share of loss of a jointly controlled entity 2,027 2,134
Share of loss (profit) of associates 9,512 (2,974 )
Loss on disposal of property, plant and equipment 2,981 1,203
Unrealized gain on other financial assets
at fair value through profit or loss – (556 )
Provision for impairment loss on trade receivables 120 553
Loss on write-down of inventories to
net realizable value 1,217 8,552
Gain on disposal of subsidiaries (10,054 ) (15,123 )

Operating profit before changes in working capital 475,305 341,990
Increase in inventories (269,045 ) (143,916 )
Decrease in other financial assets
at fair value through profit or loss 2,779 –
Increase in trade receivables (289,806 ) (38,370 )
Increase in deposits and other receivables (107,896 ) (42,077 )
(Decrease) Increase in trade and other payables (146,325 ) 215,076
Increase in trust receipt loans 94,974 14,675

Cash (used in) generated from operations (240,014 ) 347,378

Profits tax paid (30,961 ) (22,891 )

Net cash (outflow) inflow from operating activities (270,975 ) 324,487

- 34 -
APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

Consolidated Cash Flow Statement (Continued)
For the year ended 31 March 2007
2007 2006

Note HK$’000 HK$’000
Investing activities
Payment for purchase of property,
plant and equipment (184,440 ) (77,575 )
Payment for purchase of interest in leasehold land (2,641 ) –
Proceed from disposal of property,
plant and equipment 926 703
Proceed from disposal of available-for-sale
financial assets 698 –
Proceed from sales of debt instruments 774,344 344,776
Payment for purchase of other financial assets
at fair value through profit or loss – (8,808 )
Interest-bearing advances to associates (115,310 ) –
Interest-bearing advances from associates 21,339 –
Movement in amount due from
a jointly controlled entity (4,245 ) (269 )
Movement in amounts due from associates 12,338 (34,782 )
Movement in amounts due to associates 139,290 –
Proceed for disposal of subsidiaries,
net of cash disposed of 37 (356 ) (20,678 )
Payment for purchase of subsidiaries,
net of cash acquired 36 (83,477 ) (13,327 )
Payment for purchase of available-for-sale
financial assets (100 ) (230 )
Deposit payment for investment in a subsidiary – (75,660 )
Payment for investment in an associate (19,936 ) –
Payment for acquisition of minority interest
in subsidiary (20,414 ) –
Investment in debt instruments (741,000 ) (325,260 )
Repayment from an associate – 1,765
Increase investment from minority shareholders 123,057 4,874
Interest received 30,949 22,523
Exchange realignment (530 ) (4,120 )

Net cash outflow from investing activities (69,508 ) (186,068 )

Financing activities
Capital element of finance lease rentals paid (1,255 ) (3,221 )
Interest element of finance lease rentals paid (211 ) (306 )
Proceed from subscription of new shares – 285,919
Premium paid on repurchase of shares – (10,502 )
Proceed from exercise of options 7,275 –
Proceed from exercise of warrants – 24,455
Nominal value of shares repurchased – (597 )
Proceed from bank loans 973,813 829,287
Repayment of bank loans (169,787 ) (631,440 )
Interest paid (111,669 ) (60,040 )
Interim dividend paid (40,801 ) (26,992 )
Final dividend paid (42,580 ) (25,360 )

Net cash inflow from financing activities 614,785 381,203

Net increase in cash and cash equivalents 274,302 519,622
Cash and cash equivalents at the beginning of the year 1,185,789 666,167

Cash and cash equivalents at the end of the year
– Cash and bank balances 1,460,091 1,185,789

- 35 -
APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

Notes to the Financial Statements
For the Year Ended 31 March 2007
These notes form an integral part of the financial statements.
1. GENERAL

Peace Mark (Holdings) Limited (the “Company”) was incorporated in Bermuda as an exempted company with
limited liability. The address of its registered office is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.
Its shares are listed on The Stock Exchange of Hong Kong Limited.
The Company is an investment holding company. The principal activities of the Company’s subsidiaries are set
out in note 19 to the financial statements.
2. BASIS OF PREPARATION

The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting
Standards (“HKFRSs”, which also include Hong Kong Accounting Standard (“HKASs”) and Interpretations (“HK-Ints”))
issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). In addition, the consolidated financial
statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange
of Hong Kong Limited and by the Hong Kong Companies Ordinance. The consolidated financial statements have been
prepared under the historical cost convention, as modified by the available-for-sale financial assets, financial assets and
financial liabilities (including derivative financial instruments) at fair value through profit or loss, which are carried at
fair value.
The preparation of financial statements in conformity with HKFRSs requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the consolidated financial statements are disclosed in note 5 to the financial statements.
(a) Standards, amendments and interpretations effective in year 2007
The following new standards, amendments and interpretations are mandatory for the financial year ended 31
March 2007:
• HKAS 19 (Amendment) – Actuarial Gains and Losses, Group Plans and Disclosures
• HKAS 21 (Amendment) – Net Investment in a Foreign Operation
• HKAS 39 (Amendment) – Cash Flow Hedge Accounting of Forecast Intragroup Transactions
• HKAS 39 (Amendment) – The Fair Value Option
• HKAS 39 & HKFRS 4 – Financial Guarantee Contracts
(Amendment)
• HKFRS 6 – Exploration for and Evaluation of Mineral Resources
• HKFRS 1 (Amendment) & – First-time Adoption of International Financial
HKFRS 6 (Amendment) Reporting Standards and Exploration for and
Evaluation of Mineral Resources
• HKFRS-Int 4 – Determining whether an Arrangement Contains a Lease
• HKFRS-Int 5 – Rights to Interests Arising from Decommissioning,
Restoration and Environmental Rehabilitation Funds
• HK(IFRIC)-Int 6 – Liabilities arising from Participating in a Specific Market,
Waste Electrical and Electronic Equipment
• HK(IFRIC)-Int 7 – Applying the Restatement Approach under HKAS 29
Financial Reporting in Hyperinflationary Economies
The adoption of the above new standards, amendments to standards and interpretations did not have a significant
impact on the Group.

- 36 -
APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

(b) Standards, amendment to standards and interpretations that are not yet effective and have not
been adopted early by the Group
The following standards and interpretations have been published and are mandatory for accounting periods
beginning on or after 1 May 2006 or later periods that the Group has not adopted early:
– HKFRS 7, Financial Instruments: Disclosures (effective for annual periods beginning on or after 1
January 2007). HKAS 1, Amendments to capital disclosures (effective for annual periods beginning
on or after 1 January 2007). The Group assessed the impact of HKFRS 7 and the amendment
to HKAS 1 and concluded that the main additional disclosures will be the sensitivity analysis
to market risk and capital disclosures required by the amendment of HKAS 1. The Group will
apply HKFRS 7 and the amendment to HKAS 1 from 1 April 2007;
– HKFRS 8, Operating Segments (effective for annual periods beginning on or after 1 January
2009). HKFRS 8 supersedes HKAS 14, Segment Reporting, which requires segments to be
reported based on the Group’s internal reporting pattern as they represent components of the
Group regularly reviewed by management. Management considers the adoption of HKFRS 8
will have no significant impact on the segment disclosures of the Group. The Group will apply
HKFRS 8 from 1 April 2009;
– HK(IFRIC)-Int 8, Scope of HKFRS 2 (effective for annual periods beginning on or after 1 May
2006). HK(IFRIC)-Int 8 requires consideration of transactions involving the issuance of equity
instruments – where the identifiable consideration received is less than the fair value of the equity
instruments issued – to establish whether or not they fall within the scope of HKFRS 2. The
Group will apply HK(IFRIC)-Int 8 from 1 April 2007, but it is not expected to have any impact
on the Group’s financial statements;
– HK(IFRIC)-Int 9, Reassessment of embedded derivatives (effective for annual periods beginning
on or after 1 June 2006). HK(IFRIC)-Int 9 requires an entity to assess whether an embedded
derivative is required to be separated from the host contract and accounted for as a derivative
when the entity first becomes a party to the contract. Subsequent reassessment is prohibited
unless there is a change in the terms of the contract that significantly modifies the cash flows
that otherwise would be required under the contract, in which case reassessment is required. The
Group will apply HK(IFRIC)-Int 9 from 1 April 2007;
– HK(IFRIC)-Int 10, Interim Financial Reporting and Impairment (effective for annual periods
beginning on or after 1 November 2006). HK(IFRIC)-Int 10 prohibits the impairment losses
recognized in an interim period on goodwill, investments in equity instruments and investments
in financial assets carried at cost to be reversed at a subsequent balance sheet date. The Group
will apply HK(IFRIC)-Int 10 from 1 April 2007, but it is not expected to have any impact on
the Group’s financial statements;
– HK(IFRIC)-Int 11, HKFRS 2 – Group and Treasury Share Transfer (effective for accounting
periods beginning on or after 1 March 2007). This interpretation addresses how certain share-
based payment arrangements between group companies should be accounted for in the financial
statements. The Group will apply HK(IFRIC)-Int 11 from 1 April 2008 but it is not expected to
have any significant impact on the Group’s financial statements; and
– HK(IFRIC)-Int 12, Service Concession Arrangements (effective for accounting periods beginning
on or after 1 January 2008). This interpretation sets out general principles on recognising and
measuring the obligation and related rights in service concession arrangements. The Group has
no service concession arrangements and management considers the interpretation is not relevant
to the Group.
The adoption of the above amendments to standards and interpretations did not have any significant
impact on the financial statements of the Group.

- 37 -
APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of consolidation
The consolidated financial statements of the Group include the financial statements of the Company
and its subsidiaries. A subsidiary is a company whose financial and operating policies are under the Company’s
control, directly or indirectly, so as to obtain benefits from its activities. The results of subsidiaries acquired or
disposed of during the year are consolidated from or to their effective dates of acquisition or disposal. The equity
and net income attributable to minority shareholders’ interests, representing the interests of outside shareholders,
are shown separately in the Group’s balance sheet and income statement, respectively.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.
The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of
acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.
If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is
recognized directly in the income statement.
Intragroup balances and transactions and resulting unrealized profits are eliminated in full. Unrealized
losses resulting from intragroup transactions are eliminated unless cost cannot be recovered. Consolidated
financial statements are prepared using uniform accounting policies for like transactions and other events in
similar circumstances.
In the Company’s financial statements, investments in subsidiaries are carried at cost less any accumulated
impairment losses. The results of the subsidiaries are accounted for by the Company on the basis of dividends
received and receivable during the year.
(b) Associates and jointly controlled entities
An associate is an entity in which the Group or Company has significant influence, but not control or
joint control, over its management, including participation in the financial and operating policy decisions.
A jointly controlled entity is an entity which operates under a contractual arrangement between the Group
or Company and other parties, where the contractual arrangement establishes that the Group or Company and
one or more of the other parties share joint control over the economic activity of the entity.
The consolidated income statement includes the Group’s share of the post-acquisition results of associates
and jointly controlled entities for the year. In the consolidated balance sheet, interests in associates are stated at
the Group’s share of the net assets plus the goodwill less any identified impairment loss.
In the Company’s balance sheet, the investments in associates and jointly controlled entities are stated
at cost less impairment losses. The results of associates and jointly controlled entities are accounted for by the
Company on the basis of dividends received and receivable.

- 38 -
APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

(c) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of
the net identifiable assets of the acquired subsidiary/associate/jointly controlled entity at the date of acquisition.
Goodwill on acquisitions of subsidiaries and jointly controlled entities is included in intangible assets. Goodwill
on acquisitions of associates is included in investments in associates. Goodwill is tested annually for impairment
and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include
the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for
the purpose of impairment testing.
(d) Investments
The Group classifies its investments in the following categories: financial assets at fair value through
profit or loss, loans and receivables, and available-for-sale financial assets. The classification depends on the
purpose for which the investments were acquired. Management determines the classification of its investments
at initial recognition and re-evaluates this designation at every reporting date.
(i) Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for trading, and those designated at
fair value through profit or loss at inception. A financial asset is classified in this category if acquired
principally for the purpose of selling in the short term or if so designated by management. Derivatives
are also categorized as held for trading unless they are designated as hedges. Assets in this category are
classified as current assets if they are either held for trading or are expected to be realized within 12
months of the balance sheet date.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They arise when the Group provides money, goods or services
directly to a debtor with no intention of trading the receivable. They are included in current assets, except
for maturities greater than 12 months after the balance sheet date. These are classified as non-current
assets. Loans and receivables are included in long-term deposits, trade receivables, trade deposits and
other receivables in the balance sheet.
(iii) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or
not classified in any of the other categories. They are included in non-current assets unless management
intends to dispose of the investment within 12 months of the balance sheet date.
Purchases and sales of investments are recognized on trade-date – the date on which the Group commits to
purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial
assets not carried at fair value through profit or loss. Investments are derecognized when the rights to receive
cash flows from the investments have expired or have been transferred and the Group has transferred substantially
all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through
profit or loss are subsequently carried at fair value. Loan and receivables are carried at amortized cost using
the effective interest method. Realized and unrealized gains and losses arising from changes in the fair value of
the “financial assets at fair value through profit or loss” category are included in the income statement in the
period in which they arise. Unrealized gains and losses arising from changes in the fair value of non-monetary
securities classified as available-for-sale are recognized in equity. When securities classified as available-for-sale
are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains or
losses from investment securities.

- 39 -
APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

The fair values of quoted investments are based on current bid prices. If the market for a financial asset
is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These
include the use of recent arm’s length transactions, reference to other instruments that are substantially the same,
discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances.
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or
a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant
or prolonged decline in the fair value of the security below its cost is considered in determining whether the
securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss
– measured as the difference between the acquisition cost and the current fair value, less any impairment loss
on that financial asset previously recognized in the income statement – is removed from equity and recognized
in the income statement. Impairment losses recognized in the income statement on equity instruments are not
reversed through the income statement.
(e) Interest in leasehold land
Interest in leasehold land held for own use are stated at cost less accumulated amortization and accumulated
impairment losses if any. Costs mainly represents the consideration paid for the rights to use the land on which
various plants and buildings are situated for a period of 50 years from the date the respective right was granted.
Amortization of costs is calculated on a straight– line basis over the period of the rights.
(f) Property, plant and equipment
Property, plant and equipment, other than plant and machinery under installation, are stated at historical
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 item to working
condition and location for its intended use. Expenditure incurred after the property, plant and equipment have
been put into operation, such as repairs and maintenance and overhaul costs, is normally charged to the income
statement in the period in which it is incurred. In situations where it can be clearly demonstrated that the
expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of
an item of property, plant and equipment, the expenditure is capitalized as additional cost of the item.
Depreciation is provided to write off the cost of property, plant and equipment over their estimated useful
lives with a residual value of approximately 10% of the original cost.
Freehold land Nil
Buildings 2% straight line method or over the term of lease whichever is shorter
Leasehold improvements 20% reducing balance method
Other assets 20% reducing balance method
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance
sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the net sale proceeds and the carrying amount of the relevant item, and is
recognized in the income statement.

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APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

(g) Plant and machinery under installation
Plant and machinery under installation is stated at cost less any impairment losses. Cost comprises direct
and indirect costs of acquisition and installation. Installed items are transferred from plant and machinery under
installation to other categories of property, plant and equipment. No provision for depreciation is made on these
assets until such time as the relevant assets are installed and ready for use.
(h) Intangible assets (other than goodwill)
Intangible assets are measured initially at cost. Intangible assets are recognized if it is probable that the
future economic benefits that are attributable to the asset will flow to the enterprise, and the cost of the asset
can be measured reliably.
Subsequent expenditure on an intangible asset after its purchase or its completion is recognized as an
expense when it is incurred unless it is probable that the expenditure will enable the asset to generate future
economic benefits in excess of its originally assessed standard of performance and can be measured and attributed
to the asset reliably in which case it will be added to the cost of the intangible asset.
After initial recognition, intangible assets are measured at cost less accumulated amortization and any
accumulated impairment losses.
Intangible assets mainly comprise the trademark, which is stated at acquisition cost and is amortized on
a straight line basis over its useful life.
The amortization period and the amortization method are reviewed annually at each financial year end.
(i) Impairment of assets
At each balance sheet date, the Group assesses whether there is any indication that property, plant and
equipment, interest in leasehold land, intangible assets (including goodwill), investments in subsidiaries, associates
and a jointly controlled entity have suffered an impairment loss. If such an indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss, if any.
The recoverable amount is the higher of the fair value less costs to sell and value in use of an asset.
The fair value less costs to sell is the amount that could be obtained from the sale of an asset in an arm’s length
transaction between knowledgeable and willing parties less the costs of disposal, while value in use is the present
value of the future cash flows expected to be derived from an asset. Where an asset does not generate cash flows
largely independent of those from other assets, the recoverable amount is determined for the smallest group of
assets that generates cash inflows independently (i.e. a cash-generating unit).
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 a cash-generating unit is reduced to its recoverable amount. Impairment
losses are recognized as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset other than goodwill
is increased to the revised estimate of its recoverable amount, which is restricted to the carrying amount that
would have been determined had no impairment loss been recognized for the asset in prior years. A reversal
of an impairment loss is recognized as income immediately. An impairment loss in respect of goodwill is not
reversed.

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APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

(j) Inventories
Inventories are stated at the lower of cost and net realizable value. Cost, calculated on the first-in first-out
basis, comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to
their present location and condition. Net realizable value is the estimated selling price in the ordinary course of
business less the estimated costs of completion and the estimated costs necessary to make the sale.
When inventories are sold, the carrying amount of those inventories is recognized as an expense in the
period in which the related revenue is recognized. The amount of any write-down of inventories to net realizable
value and all losses of inventories are recognized as an expense in the period in which the write-down or loss
occurs. The amount of any reversal of any write–down of inventories, arising from an increase in net realizable
value, is recognized as a reduction in the amount of inventories recognized as an expense in the period in which
the reversal occurs.
(k) Taxation
(i) Taxation for the year comprises current tax and movements in deferred tax assets and liabilities.
Taxes are recognized in the income statement except to the extent that they relate to items
recognized directly in equity, in which case they are recognized in equity.
(ii) Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted
or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect
of previous years.
(iii) Deferred tax assets and liabilities arise from deductible and taxable temporary differences
respectively, being the differences between the carrying amounts of assets and liabilities for
financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax
losses and unused tax credits.
Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the
extent that it is probable that future taxable profits will be available against which the assets can
be utilized, are recognized. Future taxable profits that may support the recognition of deferred
tax assets arising from deductible temporary differences include those that will arise from the
reversal of existing taxable temporary differences, provided those differences relate to the same
taxation authority and the same taxable entity, and are expected to reverse either in the same
period as the expected reversal of the deductible temporary difference or in periods into which a
tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are
adopted when determining whether existing taxable temporary differences support the recognition
of deferred tax assets arising from unused tax losses and credits, that is, those differences are
taken into account if they relate to the same taxation authority and the same taxable entity, and
are expected to reverse in a period, or periods, in which the tax loss or credit can be utilized.
The limited exceptions to recognition of deferred tax assets and liabilities are those temporary
differences arising from goodwill not deductible for tax purposes, the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit (provided they are not part
of a business combination), and temporary differences relating to investments in subsidiaries to
the extent that, in the case of taxable differences, the Group controls the timing of the reversal
and it is probable that the differences will not reverse in the foreseeable future, or in the case of
deductible differences, unless it is probable that they will reverse in the future.
The amount of deferred tax recognized is measured based on the expected manner of realization or
settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively
enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted.

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APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow
the related tax benefit to be utilized. Any such reduction is reversed to the extent that it becomes
probable that sufficient taxable profits will be available.
Additional taxes that arise from the distribution of dividends are recognized when the liability
to pay the related dividends is recognized.
(iv) Current tax balances and deferred tax balances, and movements therein, are presented separately
from each other and are not offset. Current tax assets are offset against current tax liabilities,
and deferred tax assets against deferred tax liabilities if, and only if, the Company or the Group
has the legally enforceable right to set off current tax assets against current tax liabilities and
the following additional conditions are met:
– in the case of current tax assets and liabilities, the Company or the Group intends either
to settle on a net basis, or to realize the asset and settle the liability simultaneously;
or
– in the case of deferred tax assets and liabilities, if they relate to income taxes levied by
the same taxation authority on either:
– the same taxable entity; or
– different taxable entities, which, in each future period in which significant amounts
of deferred tax liabilities or assets are expected to be settled or recovered, intend
to realize the current tax assets and settle the current tax liabilities on a net basis
or realize and settle simultaneously.
(l) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (“the functional currency”).
The consolidated financial statements are presented in HK dollars, which is the Company’s functional
and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognized in the income statement, except when
deferred in equity as qualifying cash flow hedges or qualifying net investment hedges.
Translation differences on non-monetary items, such as equity instruments held at fair value
through profit or loss, are reported as part of the fair value gain or loss. Translation difference on non-
monetary items, such as equities classified as available-for-sale financial assets, are included in the fair
value reserve in equity.

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APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

(iii) Group companies
The results and financial position of all the group entities that have a functional currency different
from the presentation currency are translated into the presentation currency as follows:
– assets and liabilities for each balance sheet presented are translated at the closing rate at
the date of that balance sheet;
– income and expenses for each income statement are translated at average exchange rates
(unless this average is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are translated at
the dates of the transactions); and
– all resulting exchange differences are recognized as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign
entities, and of borrowings and other currency instruments designated as hedges of such investments, are
taken to shareholders’ equity. When a foreign operation is sold, such exchange differences are recognized
in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the closing rate.
(m) Trade and other receivables
Trade and other receivables are recognized initially at fair value and subsequently measured at amortized
cost using the effective interest method, less provision for impairment. A provision for impairment of trade and
other receivables is established when there is objective evidence that the Group will not be able to collect all
amounts due according to the original terms of receivables. The amount of the provision is the difference between
the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective
interest rate. The amount of the provision is recognized in the income statement.
(n) Trade and other payables
Trade and other payables are recognized initially at fair value and thereafter stated at amortized cost
unless the effect of discounting would be immaterial, in which case they are stated at cost.
(o) Provisions and contingencies
A provision is recognized when the Group has a present legal or constructive obligation as a result of a
past event, 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. Expenditures for which a provision
has been recognized are charged against the related provision in the year in which the expenditures are 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 amount provided is the present value of the expenditures
expected to be required to settle the obligation.
Contingent liabilities are not recognized in the financial statements. They are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognized
in the financial statements but disclosed when an inflow of economic benefits is probable.

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APPENDIX I PEACE MARK GROUP FINANCIAL INFORMATION

(p) Revenue recognition
Revenue from the sale of goods is recognized on the transfer of risks and rewards of ownership, which
generally coincides with the time when the goods are delivered to customers and title has passed.
Service income is recognized when the services are rendered.
Rental income under operating leases is recognized on a straight-line basis over the respective terms of
the leases.
Interest income is