Chairman's Statement

On behalf of the Board of Directors (the "Board") of Stone Group Holdings Limited and its subsidiaries, I am pleased to announce the audited results of the Group for the year ended 31 March 2007. Turnover and profit attributable to shareholders were HK$2,376 million and HK$134 million respectively, and earnings per share amounted to HK8.62 cents. As compared with the figures of the previous year, turnover, profit attributable to shareholders and earnings per share increased by HK$340 million, HK$70.43 million and HK4.38 cents respectively. The Board will recommend the payment of a final dividend of HK1.3 cents per share at the forthcoming annual general meeting.

Business Review
The Board is satisfied with the overall performance of the Group for the past year. Turnover increased by 16.7% and profit attributable to shareholders even recorded an increase of 110.2% as compared with the corresponding period last year. As for our core business, the turnover of the IT electronic and media-related business increased by 20.0% as compared with the previous year and recorded a turnaround result at the end from operating loss to operating profit. In particular, our STONE branded printers, which have been manufactured and sold for almost 20 years, and value-added tax control machines, which the Group has been one of the market pioneers, were outstanding in terms of their performance. The revenue of these two products increased by 17.7% and 38.9% respectively. Our zealous efforts for, and the continuous success of our printer business were proof of our persistence for excellence and commitment to innovation. Through the continuous improvements to our outdated products and new market exploration, STONE dot matrix printers remained as a market leader. In respect of value-added tax control machines, the launch of new models was in line with the changing market demand again represented our perseverance and endurance.

With regard to our healthcare products business, an increase of 13.3% in sales was recorded even our management had to overcome the uncertainties arising from market consolidation. However, selling expenses increased as compared with the corresponding period last year in order to comply with the new government regulations in advertisement. As a result, the operating profit of the healthcare products business slightly decreased as compared with the corresponding period last year. However, the Company's market share was on an upward track and brand recognition remained its leading position.

As for our investment business, since the Company was placed with a large number of new shares of China Construction Bank at the end of 2005, the Group has continued to utilize our funds effectively, and to maximise returns for the shareholders by seeking Initial Public Offering ("IPO") investment opportunities. During the year, we also participated in IPO placings of Bank of China, Industrial and Commercial Bank of China, China Merchants Bank, etc. The Group accepted the offer by the Board of China Railway Erju Co., Ltd. ("China Railway Erju") at the beginning of 2007 and participated in its placing of legal person shares. The Group was allotted 18.17 million new shares of China Railway Erju at RMB5.05 per share. As at 31 March 2007, the closing price of this stock was RMB11.8 per share. No further sale or purchase of SINA shares was made by the Group during the year. In addition, CCN, which we hold through CCMG, is engaged in cable broadcasting in the PRC and has developed rapidly. The Group also joined hands with its investment partners to make further investment in CCN via capital injection in CCMG. The investment funds were used for business expansion, network extension and management optimisation of CCN with a view to public listing when opportunity arises. Other investments of the Group included Me To You Holdings Limited ("Cayman MTY") which is mainly engaged in mobile SMS services and automobile GPRS services. Due to the change of policy of China Mobile during the year, Cayman MTY did not achieve its profit as guaranteed to us when we acquired it. However, as the Group remained optimistic about the future of the business and as a measure to reinforce the confidence of the management, the Group decided to take up portion of additional equity interests in Cayman MTY contemplated as the partial compensation under the original share purchase agreement. The Group's shareholding in Cayman MTY will be increased. During the year under review, Beijing MTY successfully launched GPS Safe Driving Voice Notifier "Tanlu 303" and recently introduced GPS Intelligent Navigators "Tanlu 303N", which has been well recognised by major international customers. The Group believes that Cayman MTY will have excellent development potential once its positioning and navigation communication business have been fully operated.

Business Prospects
Looking forward, to enhance returns for shareholders and to realise the values of the Company, the management will, on one hand, continue to achieve satisfactory performance in the existing core businesses, and, on the other hand, constantly seek promising investment opportunities. The Company has announced its strategic investment in the exploration of metallic mineral resources this June. As we are a new starter in this field, the Company only invested HK$10,000,000 in this project, representing approximately 16.67% of its equity interests, with a view to minimising investment risks while the remaining equity interests are taken up by other investors with identical business goal. The strategies of the Group are to make a small amount of investment at the initial stage and then consider entering into the mineral resources industry on a larger scale upon finding suitable mineral area, engaging the right professionals and accumulating adequate experience in mining industry. With continuous economic growth of the PRC and other emerging countries, being accompanied by the severe shortage of mineral resource in the PRC, the management believes that the business prospect of exploration and development of mineral resources should be auspicious.

The resignation of Mr. SHI Yuzhu from the position of Chief Executive Officer of the Group in this March constitutes a great loss to the Group. However, he remains as an Executive Director of the Group and takes a strategic role in the operation of our healthcare products business. On behalf of the Board, I would like to extend our appreciation once again for the dedication of Mr. SHI Yuzhu as Chief Executive Officer of the Group for over the past two years. Besides, I would also like to take this opportunity to express my gratitude to the Board for their trust and support to me to take up the position of Chief Executive Officer. Concurrently, I will make every effort to maximise returns for shareholders. Finally, I would like to express profound gratitude to the Board, the management and all our staff for their contributions and dedication to the Group in the past year.

DUAN Yongji
Chairman

Hong Kong, 11 July 2007