CStone Pharmaceuticals — M&A Activity 2001

Oct 31, 2001

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

兗州煤業股份有限公司

YANZHOU COAL MINING COMPANY LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

DISCLOSEABLE AND CONNECTED TRANSACTION

CLOSURE OF REGISTER OF MEMBERS

The board of Directors is pleased to announce that on 30th October, 2001, the Company entered into the Acquisition Agreement with the Parent Company for the acquisition from the Parent Company of the Railway Assets owned and operated by the Railway Department at a consideration of RMB1,220.59 million (approximately HK$1,150.41 million), subject to Adjustments.

The Acquisition constitutes a discloseable transaction under the Listing Rules. Furthermore, as the Parent Company is the controlling shareholder of the Company holding 58.19% of its total issued share capital, the Acquisition also constitutes a connected transaction for the Company under the Listing Rules and is conditional upon the approval of the Independent Shareholders. Following the completion of the Acquisition, it is anticipated that the Parent Company may utilise the railway transportation services provided by the Company. Such provision of railway transportation services by the Company to the Parent Company will constitute on-going connected transactions between the Parent Company and the Company. On 30th October, 2001, the Company entered into the Supplemental Agreement with the Parent Company to amend the Supply Agreement, such Supplemental Agreement being conditional upon the approval of the Independent Shareholders. Accordingly, on 30th October, 2001, the board of Directors resolved to convene the Extraordinary General Meeting to be held on 17th December, 2001 to approve the Acquisition and the Supplemental Agreement.

A copy of this announcement, together with the notice of the Extraordinary General Meeting, its reply slip and the proxy form, is expected to be despatched to the shareholders of the Company on or around 1st November, 2001. A circular providing additional information about, among other things, the Acquisition and the recommendations of the Independent Board Committee is expected to be despatched to the shareholders of the Company on or before 20th November, 2001. Shareholders whose names appear on the register of members of the Company at the close of business on 16th November, 2001 are entitled to attend and vote at the Extraordinary General Meeting. The register of members of the Company will be closed from 17th November, 2001 to 16th December, 2001, both days inclusive, during which period no share transfer will be registered.

The board of Directors believes that the Acquisition will generate a positive impact on the earnings per share of the Company and will enhance the Company’s ability to sustain its long-term growth through enhancing its control over a key component of the coal distribution channel.

THE ACQUISITION AGREEMENT

The principal terms of the Acquisition Agreement are set out as follows:

Date : 30th October, 2001

Parties : the Company; and

the Parent Company, which is the controlling shareholder of the Company holding 58.19% of its issued share capital.

Interest to be acquired

Pursuant to the Acquisition Agreement, the Company has conditionally agreed to acquire from the Parent Company the Railway Assets, which comprise all assets owned by the Parent Company in connection with the transportation business operated by the Railway Department, including, but without limitation, all land use rights of the Railway Department and all buildings and construction erected thereon, all other assets (fixed or current, including account receivables and inventories) and all permits, licenses, approvals and approved rights of the Railway Department in connection with the operation of its business. The Railway Assets principally comprise a railway track of approximately 184 km in length, 16 steam locomotives and 469 railway wagons, together with all rights (present and future) in connection therewith, and approximately 3,846 employees.

As shown in Figure 1 below, the Railway Assets comprise a railway transportation system linking the coal mines of both the Company and the Parent Company with the principal national railway connections and Zouxuan power station. Da Dongzhang Station is the despatch center within this transportation system. Most of the coal products are transported to the coal loading stations of Da Dongzhang Station and are then transferred either to Fucun Station or to Zouxuan Station, two principal hand-off points that connect to Yanshi (Yanzhou to Rizhao) National Railway and Jinghu (Beijing to Shanghai) National Railway, respectively. The Company currently utilises the services of the Railway Department to transport its coal products and other materials.

During the first half of 2001, the Railway Department transported 9.4 million tonnes of coal and is expected to transport 22 million tonnes of coal for the full year. In line with the Company’s projected growth in coal sales, the annual transportation volume utilising the Railway Assets is expected to increase to approximately 32 million tonnes by 2005, representing a year on year increase of 9.8%.

For the 12 months ended 31st December, 2000, the Railway Department recorded gross revenues of RMB317.77 million (approximately HK$299.50 million) and net income of RMB105.61 million (approximately HK$99.54 million). For the 6 months ended 30th June, 2001, the Railway Department recorded gross revenues of RMB176.83 million (approximately HK$166.66 million) and net income of RMB65.64 million (approximately HK$61.87 million). These figures are extracted from the historical audited accounts (based on IAS) of the Railway Department for the relevant periods.

Conditions precedent

Completion is conditional upon the fulfillment of the following conditions precedent:

(a) completion of the due diligence review being conducted by the Company on the business position of the Railway Department to the satisfaction of the Company regarding the ownership by the Railway Department of all its assets;

(b) all necessary approvals being obtained by the Company and the Parent Company from the relevant authorities of the PRC in respect of the Acquisition;

(c) approval of the Acquisition being obtained by the Independent Shareholders at the Extraordinary General Meeting and completion or fulfillment of all procedures and requirements as specified under the relevant listing rules of all stock exchanges on which the securities of the Company are listed for the transactions contemplated under the Acquisition Agreement;

(d) all necessary consents being obtained by the Company from creditors and other third parties in respect of the Acquisition;

(e) no material adverse change in the business operation and technical performance of the Railway Department occurring on or before the date of Completion; and

(f) all representations, warranties and undertakings given by the Parent Company under the Acquisition Agreement remaining true, accurate, complete and effective on the date of Completion.

In the event that any of the above conditions are not fulfilled by 30th June, 2002, the Company is entitled to elect to terminate the Acquisition Agreement.

Completion

After the conditions precedent set out above have been fulfilled, the Company and the Parent Company shall proceed with Completion on the date which is the later of (a) the date of fulfilment of all the conditions; and (b) 1st January, 2002.

Consideration and payment terms

The consideration for the Acquisition was negotiated on an arm’s length basis between the Company and the Parent Company and comprises a base purchase price and the Adjustments.

Base purchase price

The base purchase price was determined with reference to the valuation of the Railway Assets as at the Valuation Date as jointly assessed by 山東正源和信有限責任會計師事務所, a State-approved independent PRC valuer, and Sallmans (Far East) Limited, a State-approved international valuer, and confirmed by the Shandong Provincial Finance Bureau. Based on such valuation, the base purchase price was fixed at RMB1,220.59 million (approximately HK$1,150.41 million).

Adjustments

It was agreed between the Company and the Parent Company that upon Completion, the base purchase price shall be adjusted with reference to the difference between the asset value of the Railway Assets as determined on the date before Completion and audited by the accountants as specified by the Company and that on the Valuation Date. If the value as at the date before Completion is greater than that on the Valuation Date, the Adjustment will be positive and the Company shall, on or before 30th June, 2002, in addition to the balance of the base purchase price, pay such Adjustment to the Parent Company. Conversely, if the value as at the date before Completion is less than that on the Valuation Date, the Adjustment will be negative and such Adjustment shall be deducted from the balance of the base purchase price which shall be payable by the Company to the Parent Company on or before 30th June, 2002. The asset value of the Railway Assets on the date before Completion shall be calculated in the following manner:

(a) Account receivables:

The value of the account receivables as at the date before Completion shall be the lower of (i) one twelfth (based on 30 days divided by 360 days) of the gross revenue for the full year of 2001; and (ii) the audited book value of the account receivable.

(b) Inventory:

The value of the inventory of the Railway Assets as at the date before Completion shall be the lower of (i) one twenty-fourth (based on 15 days divided by 360 days) of the gross revenue for the full year of 2001; and (ii) the audited book value of the inventory.

(c) The value of the other assets of the Railway Assets shall be calculated based on their audited book value.

In addition, if the annual volume of coal transported by the Railway Department reaches the volume milestone targets of 25 million tonnes, 28 million tonnes and 30 million tonnes for the years of 2002, 2003 and 2004, respectively, the Company shall pay the Parent Company an adjustment in the sum of RMB40 million (approximately HK$37.70 million) annually.

Payment terms

The consideration for the Acquisition shall be paid by the Company in cash in five parts:

(i) 95% of the base purchase price shall be paid by the Company on the date of Completion;

(ii) the sum of the remaining 5%, and the Adjustment as calculated with reference to the difference between the audited asset value of the Railway Assets as determined on the date before Completion and that on the Valuation Date, shall be paid by the Company (if the Adjustment is a positive figure) or refunded to the Company (if the Adjustment is a negative figure) on or before 30th June, 2002;

(iii) if the annual volume of coal transported by the Railway Department reaches the requisite volume milestone target during the year 2002, the Company shall pay the Parent Company a sum of RMB40 million on or before 30th June, 2003;

(iv) if the annual volume of coal transported by the Railway Department reaches the requisite volume milestone target during the year 2003, the Company shall pay the Parent Company a sum of RMB40 million on or before 30th June, 2004; and

(v) if the annual volume of coal transported by the Railway Department reaches the requisite volume milestone target during the year 2004, the Company shall pay the Parent Company a sum of RMB40 million on or before 30th June, 2005.

FINANCIAL IMPACT OF THE ACQUISITION

Profits before and after taxation

The historical financial information of the Railway Department, prepared as if the Railway Department was a stand-alone business entity, is summarised in Table 2 (based on IAS).

in RMB millions (except for tonnage,	1999		2000		1H 2001
which are represented in 1,000 tonnes)	(audited)		(audited)		(audited)
Net Sales (net of sales tax)	300.71		307.28		171.00
Income Before Income Tax	157.56		157.63		97.97
Net Income	105.57		105.61		65.64
Tonnage	16,242		16,482		9,400

Table 2

The consolidated impact of the Acquisition on the Company is summarised in Table 3 (based on IAS).

in RMB millions						Post-Acquisition
(except for earnings per share	Pre-Acquisition		Adjustments			proforma
which are expressed in RMB)	(audited)					(unaudited)
Year ended 31st December, 2000
Net Sales (net of transportation costs
and sales tax)	3,599.74		308.23		(ab)	3,907.97
Income Before Income Tax	1,035.65		125.16		(abcd)	1,160.81
Net Profits	748.36		83.86		(abcde)	832.22
Earnings per share	0.29		-			0.32
Six months ended 30th June, 2001
Net Sales (net of transportation costs
and sales tax)	2,335.43		171.53		(ab)	2,506.96
Income Before Income Tax	617.62		86.71		(abcd)	704.33
Net Profits	447.00		58.10		(abcde)	505.10
Earnings per share	0.16		-			0.18

Table 3

Note: Proforma accounts are prepared on the assumption that the Company uses its cash to pay the consideration for the Acquisition. Further details of assumptions for proforma accounts will be provided in the circular to be issued by the Company to the shareholders.

(a) Increase in net sales of RMB98.39 million for the year ended 31st December, 2000 and increase in net sales of RMB53.03 million for the six months ended 30th June, 2001, both arising from incremental revenue generated from the transportation activities of the Railway Department.

(b) Decrease in transportation cost of RMB209.84 million for the year ended 31st December, 2000 and decrease in transportation cost of RMB118.50 million for the six months ended 30th June, 2001, both arising from elimination of payments by the Company to the Parent Company for railway transportation services.

(c) Increase in cost of goods sold and selling general and administration expenses of RMB149.65 million for the year ended 31st December, 2000 and increase in cost of goods sold and selling general and administration expenses of RMB73.04 million for the six months ended 30th June, 2001, both arising from incremental costs incurred from the operation of the transportation business by the Railway Department.

(d) Increase in depreciation arising from the additional property, plant and equipment and land use rights following the Acquisition based on a pro-forma valuation for the year ended 31st December, 2000 of RMB33.42 million and increase in such depreciation for the six months ended 30th June, 2001 of RMB11.78 million.

(e) Increase in tax expense of RMB41.30 million for the year ended 31st December, 2000 and increase in tax expense of RMB28.61 million for the six months ended 30th June, 2001, both arising form the pro-forma increase in Income Before Income Tax on the earnings contribution of the Railway Department.

Funding of the Acquisition

The Acquisition is intended to be funded out of the Company’s internal cash sources and/or long-term bank loans. As at 30th June, 2001, the Company had cash of RMB1,240.90 million (approximately HK$1,135.62 million). Coupled with the strong cash generating position of the Company’s existing operations and the Railway Assets, the board of Directors is confident that the Company is able to settle the consideration for the Acquisition and to repay its debts, if any.

Balance sheet impact of the Acquisition

Prior to giving effect to the Acquisition, the Company’s consolidated balance sheet as at 30th June, 2001 had long term assets of RMB7,693.34 million (approximately HK$7,251.02 million). Following the Acquisition, long term assets will increase by approximately RMB1,099.22 million (approximately HK$1,063.03 million), representing an increase of approximately 14.3% of long term assets, and the Company’s gearing (long term liabilities divided by shareholders’ equity) will be below 20%.

Earnings impact of the Acquisition

The board of Directors believes that the Acquisition would result in an immediate positive earnings contribution to the Company, principally because following the Acquisition:

(a) the revenue base of the Company would be expanded as a result of revenue generated by the Railway Department from transporting coal for its customers;

(b) the transportation costs would be saved as the Company would no longer be required to pay to the Parent Company for transportation services provided by the Railway Department; and

(c) with the production increase of Jining III coal mine and improved market condition, the Company anticipated that coal sales will grow steadily in the next few years, reaching about 40 million tonnes in 2005. The Company anticipated that based on its projected growth in coal sales, the earnings contribution from the Acquisition is also anticipated to correspondingly increase.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The board of Directors believes that the terms of the Acquisition Agreement are fair and reasonable so far as the Company and its shareholders are concerned and that the Acquisition is in the interests of the Company because:

(a) the Acquisition is consistent with the Company’s prevailing strategy of acquiring high quality assets;

(b) it is expected that the Acquisition would enhance the Company’s control over a key component of the principal sales and distribution channel and would provide the Company with a new and expanding source of income;

(c) the size and amount of payments made by the Company to the Parent Company for transportation services provided by the Railway Department would be significantly reduced resulting in enhanced independence of the Company;

(d) the Company would be able to operate the activities of producing, transporting, selling and distributing coal products in unity with the potential to extract cost synergies;

(e) it is expected that the Acquisition would result in an immediate increase in the earnings per share of the Company; and

(f) based on the projected growth targets of the Company in coal sales, it is expected that the Acquisition would enhance the investment value of the Company.

CONNECTED PARTY RELATIONSHIP

The Acquisition

As the Parent Company is the controlling shareholder of the Company holding 58.19% of its total issued share capital, the Acquisition constitutes a connected transaction for the Company under the Listing Rules and is conditional upon the approval of the Independent Shareholders.

On-going connected transactions

Following the Acquisition, the Parent Company will utilise the railway transportation services provided by the Company and the Company will no longer rely on the Parent Company for the provision of such services, resulting in variations to the nature of the on-going connected transactions between the Company and the Parent Company. Accordingly, the Company entered into the Supplemental Agreement with the Parent Company to amend the Supply Agreement, which covers the railway transportation services provided by the Company and other services as summarised under the section headed “The Supplemental Agreement amending the Supply Agreement regarding supply of materials and provision of services” below. The Supplemental Agreement is subject to the approval of the Independent Shareholders and is conditional upon Completion. The board of Directors currently expects that the volume of the on-going connected transaction in respect of the provision of railway transportation services by the Company to the Parent Company and/or its subsidiaries under the Supplemental Agreement falls within the de minimis provision under paragraph 14.24(5) of the Listing Rules and is therefore not subject to any disclosure and/or shareholders’ approval requirement.

THE SUPPLEMENTAL AGREEMENT AMENDING THE SUPPLY AGREEMENT REGARDING SUPPLY OF MATERIALS AND PROVISION OF SERVICES

The Supply Agreement was entered into between the Company and the Parent Company before the commencement of listing of the H shares of the Company on The Stock Exchange of Hong Kong Limited and the details of which were set out in the prospectus issued by the Company in Hong Kong dated 24th March, 1998 in connection with its initial public offering. The Stock Exchange of Hong Kong Limited has granted a waiver from strict compliance with the relevant disclosure and/or shareholders’ approval requirements under the Listing Rules in relation to, inter alia, the transactions contemplated under the Supply Agreement, the conditions of which were set out in the prospectus.

In view of the variations which will be brought about by the Acquisition on the nature of the on-going connected transactions between the Company and the Parent Company in connection with the provision of railway transportation services, on 30th October, 2001, the Company and the Parent Company entered into the Supplemental Agreement to amend the Supply Agreement.

The principal terms of the Supplemental Agreement include:

(a) deleting the relevant provisions of the Supply Agreement concerning provision of railway transportation services by the Parent Company and/or its subsidiaries to the Company; and

(b) adding into the Supply Agreement the provision of railway transportation services as an item of services to be provided by the Company to the Parent Company and/or its subsidiaries.

The Supplemental Agreement is subject to the approval of the Independent Shareholders and shall take effect upon the Acquisition Agreement taking effect.

COMPANY BACKGROUND

The Company is engaged in underground mining, preparation and sales of coal. It currently operates six coal mines, that is, Nantun, Xinglongzhuang, Baodian, Dongtan, Jining II and Jining III Coal Mines. The principal customers of the Company include electric power plants, metallurgical producers and customers located in Eastern China (which is generally more economically developed than other areas of China) and customers located in East Asia regions. The Company was the PRC’s most profitable coal mining company in 2000 and was the largest coal producer in Eastern China with raw coal production of 28 million tonnes. The Company was also one of the PRC’s largest coal exporters in 2000, mainly producing prime quality low sulphur coal and has extensive coal reserves and resources.

GENERAL INFORMATION

Under the Listing Rules, the Acquisition constitutes a discloseable and connected transaction for the Company and is conditional upon the approval of the Independent Shareholders. The supplemental agreement amending the Supply Agreement is also conditional upon the approval of the Independent Shareholders. The board of Directors will appoint an Independent Board Committee to consider and advise the Independent Shareholders on the terms of the Acquisition, and will appoint an independent financial adviser to advise the Independent Board Committee regarding the Acquisition. A circular containing, among other things, details of the Acquisition Agreement, the recommendations of the Independent Board Committee and the advice of the independent financial adviser to the Independent Board Committee will be dispatched to the shareholders of the Company on or before 20th November, 2001.

On 30th October, 2001, the board of Directors resolved to convene the Extraordinary General Meeting to be held on 17th December, 2001 to approve the Acquisition. A copy of this announcement, together with the notice of the Extraordinary General Meeting, its reply slip and the proxy form, is expected to be despatched to the shareholders of the Company on or around 1st November, 2001. Shareholders whose names appear on the register of members of the Company at the close of business on 16th November, 2001 are entitled to attend and vote at the Extraordinary General Meeting. The register of members of the Company will be closed from 17th November, 2001 to 16th December, 2001, both days inclusive, during which period no share transfer will be registered.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

“Acquisition”	the acquisition of the Railway Assets by the Company from the Parent Company;
“Acquisition	the agreement dated 30th October, 2001 entered into between the Company
Agreement”	and the Parent Company in connection with the Acquisition;
“Adjustments”	the adjustments to the purchase price payable by the Company in connection with the Acquisition, details of which is set out in the section headed “The Acquisition Agreement - Consideration and payment terms”;
“Company”	Yanzhou Coal Mining Company Limited, a joint stock limited company incorporated in the PRC with limited liability;
“Completion”	completion of the Acquisition;
“Directors”	the directors of the Company;
“Extraordinary	the extraordinary general meeting of the Company proposed to be held on
General Meeting”	17th December, 2001;
“IAS”	International Accounting Standard;
“Independent Board	a committee of the board of Directors established for the purpose of
Committee”	considering the Acquisition, comprising the independent non-executive Directors;
“Independent	shareholders of the Company, other than the Parent Company and its
Shareholders”	associates (as defined in the Listing Rules);
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;
“Parent Company”	Yankuang (Group) Corporation Limited, a State-owned and State solely invested company established in the PRC;
“PRC”	the People’s Republic of China;
“Railway Assets”	the assets owned by the Parent Company in connection with the transportation business operated by the Railway Department, which form the subject matter of the Acquisition;
“Railway	the railway department of the Parent Company, a non-legal person unit of the
Department”	Parent Company;
“RMB”	Renminbi, the lawful currency of the PRC;
“Supplemental	the supplemental agreement dated 30th October, 2001 entered into between
Agreement”	the Company and the Parent Company;
“Supply Agreement”	the materials and services supply agreement dated 17th October, 1997 entered into between the Company and the Parent Company relating to the cross-supply of materials and provision of services between them; and
“Valuation Date”	30th June, 2001.

By Order of the board of Directors

YANZHOU COAL MINING COMPANY LIMITED

Zhao Jingche

Chairman

Shandong, the PRC, 30th October, 2001

Note: Where amounts in Hong Kong dollars have been derived from Renminbi, such translations are for the convenience of the reader only, and except as otherwise indicated, have been made at the rate of RMB1.061 to HK$1.00. No representation is made that Renminbi amounts could have been or could be converted into Hong Kong dollars at this rate or any other rate or at all.

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “Extraordinary General Meeting”) of Yanzhou Coal Mining Company Limited (the “Company”) will be held at 8:00 a.m. on 17th December, 2001 at 2nd Floor Conference Room, Zong He Building, 40 Fushan Road, Zoucheng, Shandong Province (Postal Code 273500), the People’s Republic of China (“PRC”) to consider and, if thought fit, to pass the following resolutions:

ORDINARY RESOLUTIONS

1. “THAT the entry into of the railway assets acquisition agreement (which is described in the announcement of the Company published on 31st October, 2001) by the Company with Yankuang Group Corporation Limited (the “Agreement”) be and is hereby approved, AND THAT the board of directors of the Company be and is hereby authorised to do all such things for the purpose of implementing and/or giving effect to the terms of the Agreement as it may consider necessary or expedient or as the circumstances so require.”

2. “THAT the entry into of the supplemental agreement to the Materials and Services Supply Agreement by the Company with Yankuang Group Corporation Limited (the “Supplemental Agreement”) be and is hereby approved, AND THAT the board of directors of the Company be and is hereby authorised to do all such things for the purpose of implementing and/or giving effect to the terms of the Supplemental Agreement as it may consider necessary or expedient or as the circumstances so require.”

By order of the board of directors of

YANZHOU COAL MINING COMPANY LIMITED

Zhao Jingche

Chairman of the Board

PRC, Shandong Province, 30th October, 2001

Notes:

(A) Holders of the Company’s overseas listed foreign invested shares (in the form of H Shares) whose names appear on the Company’s Register of Members which is maintained by Hong Kong Registrars Limited (the “Registrar”) at the close of business on 16th November, 2001 are entitled to attend the Extraordinary General Meeting after completing the registration procedures for attending the Extraordinary General Meeting.

(B) Holders of H Shares, who intend to attend the Extraordinary General Meeting, must deliver the written replies for attending the Extraordinary General Meeting to the Office of the Secretary to the Board of Directors of the Company no later than 26th November, 2001. In addition to the foregoing:

(1) Such holders of H shares shall deliver copies of instruments of transfer, share certificates and their own identity cards to the Office of the Secretary to the Board of Directors of the Company.

(2) In case such holders are represented by authorised representatives, they shall also deliver their powers of attorney and copies of the attorney’s documents of identity to the Office of the Secretary to the Board of Directors of the Company.

Shareholders can deliver the necessary documents for registration by the Company in person, by post or by facsimile. Upon receipt of such documents, the Company will complete the registration procedures for attending the Extraordinary General Meeting and despatch copies of Extraordinary General Meeting admission cards to shareholders by post or facsimile. When attending the Extraordinary General Meeting, shareholders or their proxies may exchange copies or facsimile copies of the Extraordinary General Meeting admission cards for the original Extraordinary General Meeting admission cards.

(C) Details of the Office of the Secretary to the Board of Directors of the Company are as follows:

Address	:	40 Fushan Road, Zoucheng, Shandong Province 273500 PRC
Tel	:	86-537-538-3310
Fax	:	86-537-538-3311.

(D) Each holder of H shares who has the right to attend and vote at the Extraordinary General Meeting is entitled to appoint in writing one or more proxies, whether a shareholder or not, to attend and vote on his behalf at the Extraordinary General Meeting. A proxy of a shareholder who has appointed more than one proxy may only vote on a poll. The instrument appointing a proxy must be in writing under the hand of the appointer or his attorney duly authorised in writing, or in the case of a corporation, must be either under its common seal or under the hand of any director or attorney duly authorised. If that instrument is signed by an attorney of the appointer, the power of attorney authorising that attorney to sign, or other documents of authorisation, must be notarially certified. For holders of H shares, the power of attorney or other documents of authorisation and proxy forms must be delivered to the Registrar no less than 24 hours before the time appointed for the holding of the Extraordinary General Meeting in order for such documents to be valid.

(E) The H share register will be closed from 17th November, 2001 to 16th December, 2001 (both days inclusive), during which time no transfer of H shares will be registered. Holders of H shares who wish to attend the Extraordinary General Meeting must deliver their duly stamped instruments of transfer, accompanied by the relevant share certificates to the Registrar by no later than 4:00 p.m. on 16th November, 2001. The Registrar’s address is as follows: 2nd Floor, Vicwood Plaza,199 Des Voeux Road Central, Hong Kong.

(F) The Extraordinary General Meeting is expected to last half a day, shareholders attending the Extraordinary General Meeting are responsible for their own transportation and accommodation expenses.

Please also refer to the published version of this announcement in the South China Morning Post dated 31/10/2001