IDT Report on Stime Watch International Holding Limited

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The Insider Dealing Tribunal has submitted to the Financial Secretary a report on its inquiry in relation to the listed securities of Stime Watch International Holding Limited (now renamed as Medtech Group Company Limited)

Following is a summary of the Tribunal's report:

Introduction

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By notice dated 11 April 2002, the Financial Secretary required the Insider Dealing Tribunal to institute an inquiry in relation to the listed securities of Stime Watch International Holding Limited (hereafter known as Stime Watch) to inquire into and determine -

(a) whether there has been insider dealing arising out of the dealings in the listed securities of the company by and/or on behalf of Messrs. Tsang King Hung, Wilson Wong Wing Shing, Mohammed Adil and Lau Wan during the period from 29 July 1997 to 7 August 1997;

(b) in the event of there having been insider dealing as described in paragraph (a) above, the identity of each and every insider dealer; and

The Tribunal under the chairmanship of Deputy High Court Judge McMahon completed its inquiry in respect of liability, that is to identify those persons who did or did not commit acts of insider dealing, and submitted a report in that regard to the Financial Secretary on 6 December 2002.

The Company

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Stime Watch is a Bermuda incorporated company listed on the Stock Exchange of Hong Kong on 23 July 1996. Its principal activities are investment holding, manufacturing and trading of watches and watch components, and electroplating services.

In late July 1997, there was a proposal for a joint venture with Hua Zheng Kang Communication Technology Limited (HZK) to develop a new product in the PRC. An agreement was reached in principle on 31 July 1997 and the board of Stime Watch then passed a resolution to approve the joint venture on 1 August 1997. On 4 August 1997, Stime Watch made an announcement on its negotiation on the joint venture proposal. Further details of the joint venture agreement between Stime Watch and HZK were announced on 5 August 1997.

During 28 July 1997 to 31 July 1997, the share price of Stime Watch increased by 17% from $0.98 to $1.15. On 1 August 1997, the share price and the trading volume increased substantially. The share price surged 16% to close at $1.33 with trading volume increased by 123%. Following the announcements on 4 August 1997, the share price further increased by 26% from $1.33 to close at $1.67 on 8 August 1997.

The joint venture was a diversification of the core business of Stime Watch into a field of high technology and would strengthen Stime Watch's earning potential. As evidenced by the increase in share price of Stime Watch after the announcement of the joint venture, this information was price sensitive and was regarded as the relevant information in this insider dealing case.

It was alleged that the implicated parties dealt in Stime Watch shares in late July to early August 1997 had committed insider dealing.

Findings

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The Tribunal concluded its findings by unanimous decision as follows :

(a) Mr Wilson Wong Wing Shing - The trading conducted by Mr Wong through the account of Mr Modammed Adil at China Point Stock Brokers Ltd. from 30 July 1997 to 4 August 1997 inclusive was insider dealing.

(b) Mr Tsang King Hung - The trading conducted by Mr Tsang through the accounts of his nominees Mr Lam Wai Keung, Mr Lo Kwok Wah, Mr Ng Kam Cheuk and Ms Ng Yu Shui at various brokers from 30 July 1997 to 4 August 1997 inclusive was insider dealing.

(c) Mr Mohammed Adil - He was not found to have engaged in insider dealing. He was purely a nominee of Mr Wilson Wong Wing Shing and was under Mr Wong's control in his dealings in Stime Watch shares through China Point Stock Brokers Ltd.

(d) Mr Lau Wan - He was not found to have engaged in insider dealing.

In respect of the requirement to determine the amount of profit gained or loss avoided and thereafter to make consequential orders and penalties, the Tribunal will proceed to hear representations on a date to be fixed.

End/Friday, December 13, 2002

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