Genesis Scale Holdings Limited — Capital/Financing Update 2000

Oct 17, 2000

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.

CLIMAX INTERNATIONAL COMPANY LIMITED

(Incorporated in Bermuda with limited liability)

Centurion Corporate Finance Limited

Financial adviser to Climax International Company Limited

ANNOUNCEMENT

LETTER OF INTENT

The Board would like to announce that the signing of the Investment Agreement has been further delayed and will now be extended to 20 October 2000.

As the Proposed Investment is subject to a number of conditions precedent and in view of the fact that the letter of intent is not legally binding and the Investment Agreement has not been entered into, the Proposed Investment may or may not proceed. Shareholders and the investing public are, therefore, advised to exercise caution when dealing in the Shares.

Reference is made to the announcements dated 25 July 2000, 18, 28 September 2000 and 7 October 2000 respectively in relation to the non legally binding letter of intent dated 19 July 2000 between Climax International Company Limited (the "Company") and First Century Holdings Limited (the "Investor"). Unless otherwise defined, terms used in this announcement shall have the same meanings as those used in the announcement dated 25 July 2000.

The letter of intent provided that the Investment Agreement, which would set out the terms and conditions of the Proposed Investment, would be entered into on or before 18 September 2000. This deadline was extended to 28 September 2000 (as announced on 18 September 2000) and on 28 September 2000, it was announced that such deadline has been further extended to 7 October 2000. It was announced on 7 October 2000 that such deadline has been further extended to 16 October 2000.

Whilst the Company, its bank creditors and the Investor are progressing the relevant draft agreements, the Company and the Investor still require more time to finalise the terms of the Investment Agreement. There are a number of legal and drafting matters which still require further clarifications, which include clarifications from overseas legal counsels in respect of certain overseas securities rules and regulations. As such, the parties have agreed that the deadline for the entering into of the Investment Agreement will now be extended to 20 October 2000.

Save as set out in this announcement and the announcement dated 28 September 2000, no other material changes have been made to the terms of the letter of intent and the principal terms of the Proposed Investment remain unchanged. The Board would also like to reiterate that while progress has been made to finalise the documentation to implement the Proposed Investment (including the Investment Agreement), the parties are still in the process of settling the detailed terms of such documentation. The final forms of such documentation will then be submitted for formal approval by the Board and the Bank Group.

As the Proposed Investment is subject to a number of conditions precedent and in view of the fact that the letter of intent is not legally binding and the Investment Agreement has not been entered into, the Proposed Investment may or may not proceed. Shareholders and the investing public are, therefore, advised to exercise caution when dealing in the Shares.

By Order of the Board

Climax International Company Limited

Fung Kwong Yan

Chairman

Hong Kong SAR, 16 October 2000

The directors of Climax International Company Limited jointly and severally accept full responsibility for the accuracy of the information contained in this announcement and confirm, having made all reasonable inquiries, that to the best of their knowledge and belief, opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.