GoFintech Quantum Innovation Limited — M&A Activity 2002

Jun 4, 2002

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this document, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or otherwise transferred all your shares in Pacific Challenge Holdings Limited, you should at once hand this document and the accompanying form of acceptance and transfer 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 document should be read in conjunction with the accompanying form of acceptance and transfer, the contents of which form part of the terms of the Offers contained herein.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this document, 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 document.

KANDY PROFITS LIMITED

(incorporated in the British Virgin Islands with limited liability)

VOLUNTARY CONDITIONAL CASH OFFER BY

TINGKONG – REXCAPITAL SECURITIES INTERNATIONAL LIMITED

ON BEHALF OF

KANDY PROFITS LIMITED

TO ACQUIRE ALL THE SHARES IN THE ISSUED SHARE CAPITAL OF AND TO CANCEL ALL THE OUTSTANDING SHARE OPTIONS GRANTED BY PACIFIC CHALLENGE HOLDINGS LIMITED

Financial Adviser to Kandy Profits Limited

REXCAPITAL (HONG KONG) LIMITED

The procedure for acceptance of the Share Offer is set out in Appendix I of this document and in the accompanying form of acceptance and transfer. The procedure for acceptance of the Option Offer is set out in Appendix I of this document and in the Form of Renunciation, which can be obtained by the Optionholders at the principal place of business of the Company in Hong Kong at Room 2201-6, 22nd Floor, Worldwide House, 19 Des Voeux Road Central, Hong Kong. Acceptances of the Offers should be received by the share registrar of the Company, Tengis Limited, at 4th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong no later than 4:00 p.m. on Thursday, 20 June 2002 or such later time and/or date as Kandy Profits Limited may announce.

23 May 2002

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Offeror. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from TKR Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix I – Further Terms of the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Appendix II – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25

– i –

DEFINITIONS

Unless the context requires otherwise, the following expressions have the following meanings in this document:

“Announcement”	the press announcement dated 25 April 2002 made by
	the Offeror regarding the Offers
“Board’	the board of directors of the Company
“CCASS”	the Central Clearing and Settlement System established
	and operated by Hongkong Clearing
“Company”	Pacific Challenge Holdings Limited, a company
	incorporated in Bermuda with limited liability, the
	securities of which are listed on the Stock Exchange
“Companies Ordinance”	the Companies Ordinance, Chapter 32 of the laws of
	Hong Kong
“Executive”	the Executive Director of the Corporate Finance Division
	of the SFC or any delegate of the Executive Director
“First Closing Date”	20 June 2002, being the 28th day after the date of posting
	of the Offer Document
“Form of Renunciation”	the form of acceptance and renunciation in relation to
	the Option Offer which can be obtained by the
	Optionholders at the principal place of business of the
	Company in Hong Kong, Room 2201-6, 22nd Floor,
	Worldwide House, 19 Des Voeux Road Central, Hong
	Kong
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“Hong Kong Clearing”	Hong Kong Securities Clearing Company Limited
“Latest Practicable Date”	21 May 2002, being the latest practicable date prior to
	the printing of this document for the purpose of
	ascertaining certain information contained herein

– 1 –

DEFINITIONS

“Listing Rules”	Rules Governing the Listing of Securities on the Stock
	Exchange
“Long Stop Date”	12 August 2002, being the latest date on which the
	Offeror may declare the Offer unconditional in all
	respects under the Takeovers Code or such later date as
	the Executive may consent to
“Mr. Cheong”	Mr. Cheong Tin Yau
“Offers”	the Share Offer and the Option Offer
“Offer Document”	this document setting out the details of the Offers, and
	the accompanying form of acceptance and transfer, to be
	sent to shareholders of the Company
“Offeree Document”	the response document in respect of the Offers to be
	issued by the Company to the Shareholders in accordance
	with the Takeovers Code
“Offer Price”	HK$0.67 per Share
“Offeror”	Kandy Profits Limited, an investment holding company
	incorporated in the British Virgin Islands with limited
	liability which is wholly-owned by Mr. Cheong
“Option(s)	Share option(s) granted under the share option scheme
	of the Company adopted by the Company on 11
	September 1998 with an exercise price of HK$0.32 per
	Share
“Optionholder(s)”	holder(s) of Options
“Option Offer”	the conditional cash offer being made by TKR Securities
	on behalf of the Offeror for acquiring all outstanding
	Options at HK$0.35 per Option on the terms and subject
	to the conditions contained in this document and the
	Form of Renunciation
“PRC”	People’s Republic of China
“REXCAPITAL”	REXCAPITAL (Hong Kong) Limited, an investment
	adviser registered under the Securities Ordinance, Chapter
	333 of the laws of Hong Kong

– 2 –

DEFINITIONS

“SDI Ordinance” Securities (Disclosure of Interests) Ordinance, Chapter 396 of the laws of Hong Kong “SFC” Securities and Futures Commission “SFC Ordinance” Securities and Futures Commission Ordinance, Chapter 24 of the laws of Hong Kong “Shareholders” holders of Shares “Shares” ordinary shares of HK$0.10 each in the issued share capital of the Company “Share Offer” the voluntary conditional cash offer by TKR Securities on behalf of the Offeror to acquire all the issued Shares of the Company on and subject to the terms and conditions set out in this document and in the form of acceptance and transfer in respect thereof “Share Registrar” the share registrar of the Company, Tengis Limited, at 4th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong “Stock Exchange” The Stock Exchange of Hong Kong Limited “TKR Securities” TingKong-RexCapital Securities International Limited, a securities dealer registered under the Securities Ordinance (Chapter 333 of the laws of Hong Kong) “Takeovers Code” Hong Kong Code on Takeovers and Mergers “Undertaking Shareholder” Super Drive Inc., who has irrevocably undertaken to the Offeror to accept the Offers in respect of an aggregate of 93,544,000 Shares (representing approximately 32.4% of the issued share capital of the Company) owned by it

– 3 –

EXPECTED TIMETABLE

Offers open . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 23 May 2002

Latest date for posting of the Offeree

Document (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . on or before Thursday, 6 June 2002

First Closing Date (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 20 June 2002

Latest time by which the Share Offer could be declared

unconditional as to acceptances (Note 3) . . . . . . . . . . . . . . . . . . . . . . . Monday, 22 July 2002

Latest time by which the Share Offer could be declared

unconditional in all respects (Note 4) . . . . . . . . . . . . . . . . . . . . . . . Monday, 12 August 2002

Notes:

1. Under the Takeovers Code, the Company is required to post the Offeree Document to Shareholders within 14 days of posting of the Offer Document (unless the Executive consents to a later date).

2. Under the Takeovers Code, where the Offeree Document is posted after the date on which the Offer Document is posted, the Offers must remain open for acceptance for at least 28 days following the date on which the Offer Document is posted. Accordingly, the Offers will remain open for acceptance until 4:00 p.m. on 20 June 2002. The Offeror reserves the right to extend the Share Offer until such date as it may determine in accordance with the Takeovers Code (or as permitted by the Executive in accordance with the Takeovers Code). The Offeror will issue a press announcement in relation to any extension of the Share Offer, which announcement will state either the next closing date or that the Share Offer will remain open until further notice. In the latter case, at least 14 days’ notice in writing will be given before the Share Offer is closed to those Shareholders who have not accepted the Share Offer.

3. In the event that the Share Offer has not been declared or has not become unconditional as to acceptances on or before 22 July 2002, being 60 days after posting of the Offer Document, the Offers will lapse unless the Executive consents to a later date. As stated in note 2 above, the Offeror reserves its right to extend the Share Offer until such date as it may determine in accordance with the Takeovers Code (or as permitted by the Executive in accordance with the Takeovers Code), but there is no certainty that the Share Offer will be extended beyond the First Closing Date.

4. In the event that the Share Offer has not been declared or has not become unconditional in all respects on or before 12 August 2002, being 81 days after posting of the Offer Document, the Offers will lapse unless the Executive consents to a later date. As stated in note 2 above, the Offeror reserves its right to extend the Share Offer until such date as it may determine in accordance with the Takeovers Code (or as permitted by the Executive in accordance with the Takeovers Code), but there is no certainty that the Share Offer will be extended beyond the First Closing Date.

5. Remittances in respect of the consideration payable for the Shares and the Options tendered under the Offers will be posted as soon as possible but in any event within 10 days of the later of the date of receipt by the Share Registrar of all the relevant documents to render the acceptance under the Offers complete and valid, and the date when the Share Offer becomes or is declared unconditional.

– 4 –

LETTER FROM THE OFFEROR

KANDY PROFITS LIMITED

(incorporated in the British Virgin Islands with limited liability)

Director: Mr. Cheong Tin Yau

Registered Office Trident Chambers, P.O.Box 146, Road Town, Tortola, British Virgin Islands 23 May 2002

To the Shareholders and Optionholders:

Dear Sir or Madam,

VOLUNTARY CONDITIONAL CASH OFFER BY

TINGKONG – REXCAPITAL SECURITIES INTERNATIONAL LIMITED

ON BEHALF OF KANDY PROFITS LIMITED

TO ACQUIRE ALL THE SHARES IN THE ISSUED SHARE CAPITAL OF AND TO CANCEL ALL THE OUTSTANDING SHARE OPTIONS GRANTED BY PACIFIC CHALLENGE HOLDINGS LIMITED

INTRODUCTION

On 25 April 2002 and 30 April 2002 respectively, we issued announcements in respect of a voluntary conditional cash offer by TKR Securities on our behalf to acquire all the shares in the issued share capital of the Company. Details of the Offers and the action you should take are set out in the Letter from TKR Securities contained in, and in Appendix 1 of, the Offer Document. We would like to take this opportunity to give you a concise summary of the Offers, which, we believe, will be helpful to you.

The Offers are made by TKR Securities on our behalf on the following terms:

For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.67 in cash For the cancellation of each Option . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.35 in cash

The Option Offer is conditional on the Share Offer becoming unconditional.

– 5 –

LETTER FROM THE OFFEROR

The Offer Price represents (i) a premium of approximately 17.5% over the closing price of HK$0.57 per Share as quoted on the Stock Exchange on 24 April 2002, being the last trading day before the date of the Announcement; (ii) a premium of approximately 45.7% over the average closing price of HK$0.46 per Share as quoted on the Stock Exchange for the period of 10 trading days up to and including 24 April 2002, being the last trading date before the date of the Announcement; and (iii) a premium of approximately 4.7% over the closing price of HK$0.64 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

As mentioned above, the detailed terms and condition of the Offers are set out in the Letter from TKR Securities and Appendix I of the Offer Document. We urge you to read them carefully.

Yours faithfully, For and on behalf of Kandy Profits Limited Cheong Tin Yau Director

– 6 –

LETTER FROM TKR SECURITIES

TingKong – RexCapital Securities International Limited 鼎康泰證券國際有限公司

Suite 1701, 17th Floor, New World Tower 1, 16-18 Queen’s Road Central, Hong Kong

23 May 2002

To the Shareholders and Optionholders

Dear Sir or Madam,

VOLUNTARY CONDITIONAL CASH OFFER BY TINGKONG – REXCAPITAL SECURITIES INTERNATIONAL LIMITED

ON BEHALF OF

KANDY PROFITS LIMITED

TO ACQUIRE ALL THE SHARES IN THE ISSUED SHARE CAPITAL OF AND TO CANCEL ALL THE OUTSTANDING SHARE OPTIONS GRANTED BY PACIFIC CHALLENGE HOLDINGS LIMITED

INTRODUCTION

On 25 April 2002 and 30 April 2002 respectively, the Offeror made announcements in respect of a voluntary conditional cash offer to be made on its behalf by TKR Securities for all the issued Shares and outstanding Options.

The Offeror has received an irrevocable undertaking from the Undertaking Shareholder to accept the Share Offer in respect of an aggregate of 93,544,000 Shares, representing approximately 32.4% of the existing issued share capital of the Company. The aggregate of 93,544,000 Shares represents the entire shareholding held by the Undertaking Shareholder in the Company.

The Share Offer is being made for 288,868,000 Shares, representing all the existing issued share capital of the Company. As at the Latest Practicable Date, the Company had in issue Options to subscribe for an aggregate of 21,492,000 Shares at an exercise price of HK$0.32 per Share. The Offeror shall offer, subject to the Share Offer becoming unconditional, to pay all holders of such outstanding Options HK$0.35 in cash in respect of every Option held by them in consideration of the surrender to the Offeror by the relevant holders of all the rights in respect of such Option, following which such Option will be cancelled and extinguished.

– 7 –

LETTER FROM TKR SECURITIES

The Offers are made in compliance with the Takeovers Code.

This letter sets out, amongst other things, the terms and other details of the Offers, together with information on the Offeror and the intentions of the Offeror regarding the future of the Group.

Under the Takeovers Code, the Offeree Document which will contain, amongst other things, a letter from the independent board committee of the Company formed to advise you on the Offers and a letter of advice from the independent financial advisers appointed to advise the independent board committee of the Company in respect of the Offers, will be sent to you as soon as practicable, and in any event, no later than 14 days from the date of posting of the Offer Document. Shareholders and Optionholders are strongly advised to read the Offeree Document before deciding whether or not to accept the Offers.

THE OFFERS

The Share Offer

The Share Offer is made by TKR Securities on behalf of the Offeror on the following terms:

For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.67 in cash

The offer price of HK$0.67 per Share represents:

• (i) a premium of approximately 17.5% over the closing price of HK$0.57 per Share as quoted on the Stock Exchange on 24 April 2002, being the last trading day before the date of the Announcement;

• (ii) a premium of approximately 45.7% over the average closing price of HK$0.46 per Share as quoted on the Stock Exchange for the period of 10 trading days up to and including 24 April 2002, being the last trading day before the date of the Announcement;

• (iii) a premium of approximately 4.7% over the closing price of HK$0.64 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and

• (iv) a discount of approximately 20.2% to the unaudited net tangible assets of HK$0.84 per Share as at 30 September 2001.

The highest and lowest prices per Share as quoted on the Stock Exchange during the six-month period immediately preceding the date of the Announcement and the Latest Practicable Date were HK$0.79 on 21 February 2002 and HK$0.265 on 26 October 2001 and from 29 October 2001 to 31 October 2001 respectively.

– 8 –

LETTER FROM TKR SECURITIES

The Option Offer

The Option Offer is made by TKR Securities on behalf of the Offeror on the following terms:

For the cancellation of each Option . . . . . . . . . . . . . . . . . . . . . HK$0.35 in cash

The Option Offer is conditional on the Share Offer becoming unconditional.

As at the Latest Practicable Date, the Company had in issue Options to subscribe for an aggregate of 21,492,000 Shares at an exercise price of HK$0.32 per Share. The Offeror will, subject to the Share Offer becoming unconditional, pay all holders of such outstanding Option HK$0.35 in cash in respect of every Option held by them in consideration of the surrender to the Offeror by the relevant holders of all the rights in respect of such Option, following which such Option will be cancelled and extinguished.

Based on the existing issued share capital of the Company, assuming full exercise of the outstanding Options, an additional 21,492,000 Shares will fall to be issued, representing approximately 7.4% and approximately 6.9% of the existing and enlarged issued capital of the Company respectively. Assuming all outstanding Options are tendered, the aggregate amount payable by the Offeror to the Optionholders will be HK$7,522,200.

Valuation of the Offers

On the basis of the Offers and the issued share capital of the Company of 288,868,000 Shares and Options to subscribe for an aggregate of 21,492,000 Shares outstanding as at the Latest Practicable Date, the Offers value the whole of the issued share capital of the Company at approximately HK$193.5 million and the outstanding Options at approximately HK$7.5 million.

At the Offer Price and the offer price for each outstanding Option, the amount payable by the Offeror on full acceptance of the Offers amounts to approximately HK$201 million.

Dealing in Shares

The Offeror or parties acting in concert with it have not dealt in the Shares during the six-month period prior to the commencement of the offer period and up to the Latest Practicable Date.

– 9 –

LETTER FROM TKR SECURITIES

TERMS AND CONDITION OF THE OFFERS

Given that one of the subsidiaries of the Company is a registered person under the SFC Ordinance, any change in the substantial shareholding of that subsidiary is restricted under Section 26A of the SFC Ordinance. The Offers are subject to all regulatory approvals including the approval by the SFC of the Offeror becoming a substantial shareholder of the Company.

In addition, the Share Offer is conditional on valid acceptances of the Share Offer being received by the Offeror by 4:00 p.m. on 20 June 2002, and will close on the First Closing Date (or such later time and/or date as the Offeror may, subject to the Takeovers Code, determine and announce) in respect of such number of Shares which, together with the Shares held by the Offeror and parties acting in concert with it, represents more than 50% of the Shares carrying voting rights then exercisable at a general meeting of the Company.

If the Share Offer does not become unconditional on or before the First Closing Date, the Offers will lapse unless extended by the Offeror in which case, the Offeror will issue a press announcement as soon as practicable thereafter. The latest date on which the Offeror can declare the Offers unconditional as to acceptances is 22 July 2002, being 60 days after the date of the posting of the Offer Document, or such later date as the Executive may consent to. The latest date on which the Offeror can declare the Offers unconditional in all respects is 12 August 2002, being 21 days after the latest date on which the Offeror can declare the Offers unconditional as to acceptances, or such later date as the Executive may consent to. The Offeror reserves its right to extend the Offer until such date as it may determine in accordance with the Takeovers Code (or as permitted by the Executive in accordance with the Takeovers Code), but there is no certainty that the Offer will be extended beyond the First Closing Date.

If the Share Offer becomes unconditional on or before the First Closing Date, the Shareholders will be notified by press announcement as soon as practicable thereafter.

The Shares will be acquired free from all liens, charges, encumbrances, rights of preemption and any other third party rights of any nature and together with all rights attaching to them, including, without limitation, the right to receive in full all dividends and other distributions, if any, declared, made or paid on or after 23 May 2002.

The Option Offer is conditional on the Share Offer becoming unconditional.

FINANCIAL RESOURCES OF THE OFFEROR

REXCAPITAL has been engaged by the Offeror as its financial adviser in respect of the Offers and TKR Securities will make the Offers on behalf of the Offeror. The Offers are financed by the Offeror from its internal resources. In addition, TKR Finance Limited has extended a stand-by facility to the Offeror for the purpose of financing the Offers. REXCAPITAL confirms that it is satisfied that sufficient financial resources are available to the Offeror for the Offeror to meet its commitments in the event of full acceptance of the Offers.

– 10 –

LETTER FROM TKR SECURITIES

INFORMATION ON THE OFFEROR

The Offeror is a private company incorporated in the British Virgin Islands with limited liability and is wholly-owned by Mr. Cheong. It is an investment holding company which, as at the Latest Practicable Date, has not conducted any activities other than the making of the Offers.

Mr. Cheong, aged 41, is a Hong Kong permanent resident. He has over 18 years’ experience in PRC trade, in particular, the trading of leather good machinery, petro-chemical products and coal. He also has over 8 years’ experience in real estate development in the PRC including hotel and residential development projects in various parts of the PRC.

As at the Latest Practicable Date, the Offeror and/or parties acting in concert with it has no interest in or options or rights to acquire any Shares. The Offeror is independent from, not connected with and not acting in concert with any of the substantial shareholders, chief executive or directors of the Company and any of its subsidiaries or their respective associates.

INTENTIONS OF THE OFFEROR IN RESPECT OF THE GROUP

Business of the Group

The Offeror intends to continue the existing principal businesses of the Group, that is, corporate finance services, manufacturing and trading. The continuation of the provision of corporate finance services as a principal business of the Group is subject to the Group being able to obtain all relevant regulatory registrations and approvals necessary to conduct such business after the completion of the Offers.

The Offeror will conduct a review on the operation and financial position of the Group and will formulate long-term business plans and strategies for the Group and consider whether any asset disposals, asset acquisitions, fixed assets redeployment, business rationalisation, business divestment and/or business diversification will be appropriate in order to enhance the long term growth potential of the Group. Such acquisitions or disposals, if any, will only be undertaken in accordance with the relevant provisions of the Listing Rules. In the event of any such acquisitions or disposals, further announcements will be made in accordance with the Listing Rules.

Mr. Cheong’s experience in trading and real estate development and his business connections in the PRC will benefit the Group and is likely to create new business opportunities for the Group, enabling it to improve its earnings base.

– 11 –

LETTER FROM TKR SECURITIES

The Offeror has no intention to privatise the Company. As stated below, the Offeror intends that the Company should maintain the listing status of the Shares on the Stock Exchange and that it has undertaken to the Stock Exchange to take appropriate steps following the closing of the Offers to ensure that such number of Shares as may be required by the Stock Exchange are held by the public.

The Offeror is aware of the uncertainties arising from the current legal disputes between a substantial shareholder of the Company and the Company as announced by the Company, and does not expect that such disputes would have any impact on the Offeror proceeding with the Offers.

In the event that the Offeror receives valid acceptances in respect of not less than 90% of the Shares subject to the Offer, the Offeror does not intend to exercise its right under the Companies Ordinance to compulsorily acquire any Shares that are subject to but not tendered for acceptance under the Offer.

Directors and Management

The Offeror intends to invite all existing members of the Board to remain as directors of the Company. At the same time, the Offeror intends to appoint additional directors with experience in the Group’s existing business to the Board.

The Offeror does not expect that there will be any material changes to the continued employment of the employees of the Group or to the employment terms or conditions of the employees of the Group as a result of the Offers.

INFORMATION ON THE GROUP

The Company is an investment holding company. Its subsidiaries are principally engaged in the provision of corporate finance advisory and other related services, investment holding, manufacturing and trading. Although the Group disposed of three subsidiaries which were principally engaged in the provision of stock brokerage, futures brokerage, and margin financing services during the financial year ended 31 March 2001, the Group’s corporate finance division as well as the operation of manufacturing and trading continue to generate revenue and profit for the Group (as shown in the interim report of the Company for the six months ended 30 September 2001) despite the inactive capital market conditions in Hong Kong.

The unaudited consolidated net loss after tax and minority interests of the Group was approximately HK$19.3 million for the six months ended 30 September 2001. The unaudited consolidated net tangible assets as at 30 September 2001 was approximately HK$241.3 million, equivalent to net tangible assets per Share of HK$0.84. For the year ended 31 March 2001, the audited consolidated profit attributable to shareholders of the Company was approximately HK$10.8 million as compared to HK$35.5 million for the year ended 31 March 2000. The audited consolidated net tangible assets as at 31 March 2000 and 31 March 2001 amounted to approximately HK$219.3 million and HK$261.2 million respectively.

– 12 –

LETTER FROM TKR SECURITIES

MAINTAINING THE LISTING STATUS OF THE COMPANY

It is the intention of the Offeror to maintain the listing status of the Shares on the Stock Exchange. The Offeror has undertaken to the Stock Exchange to take appropriate steps as soon as possible following the closing of the Offers to ensure that not less than 25 per cent. of the issued share capital of the Company will be held by the public.

The Stock Exchange has stated that, if less than 25 per cent. of the issued Shares are in public hands following the closing of the Offer, or if the Stock Exchange believes that a false market exists or may exist in the trading of the Shares or that there are insufficient Shares in public hands to maintain an orderly market, then it will consider exercising its discretion to suspend dealings in the Shares.

The Stock Exchange has also stated that it will closely monitor all future acquisitions or disposals of assets by the Company. If the Shares remain listed on the Stock Exchange, any acquisition or disposal of assets by the Company will be subject to the provisions of the Listing Rules. Pursuant to the Listing Rules, the Stock Exchange has discretion to require the Company to issue a circular to Shareholders where an acquisition or disposal by the Company is proposed, irrespective of the size of the proposed acquisitions and disposals of assets by the Company, particularly where such proposed acquisitions and disposals of assets by the Company represent a departure from the principal activities of the Company. The Stock Exchange has the power to aggregate a series of acquisitions and disposals of assets by the Company and any such acquisitions and disposals of assets may result in the Company being treated as if it were a new listing applicant and subject to the requirements for new listing application as set out in the Listing Rules.

SETTLEMENT OF THE CONSIDERATION

Assuming the Share Offer becomes unconditional and provided that the relevant form(s) of acceptance and transfer or the Form(s) of Renunciation, Share certificate(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) are in good order in all respects and received by the Share Registrar in respect of the Offers by not later than 4:00 p.m. on 20 June 2002 or such later time and/or date as the Offeror may determine and announce, a cheque for the consideration due under the Offers will be despatched to the accepting shareholders of the Company or the accepting Optionholders (as the case may be) as soon as possible but in any event within ten days of the later of: (i) the date on which the Share Offer becomes or is declared unconditional in all respects; and (ii) the date of receipt of all the relevant documents to render such acceptance complete and valid.

GENERAL

Pursuant to the Takeovers Code, the Company is required to (i) form an independent board committee to consider the Offers and make recommendation to the Shareholders and the Optionholders regarding the acceptance of the Offers; and (ii) appoint an independent financial adviser to advise the independent board committee regarding the Offers.

– 13 –

LETTER FROM TKR SECURITIES

Pursuant to the Takeovers Code, the Company is required to despatch the Offeree Document containing, amongst other things, the advice from the independent board committee and the independent financial adviser to the independent board committee within 14 days after the posting of the Offer Document.

FURTHER TERMS OF THE OFFER

Further terms of the Offers, including the procedure for acceptance, the acceptance period and revisions of the Offers, are set out in Appendix I to the Offer Document and the accompanying form of acceptance and transfer.

STAMP DUTY

Seller’s ad valorem stamp duty arising in connection with acceptance of the Share Offer at a rate of HK$1.00 for every HK$1,000 (or part thereof) of the value of the consideration payable in respect of the relevant acceptance by the Shareholders will be deducted from the amount payable to such Shareholders who accept the Share Offer. The Offeror will pay the stamp duty on behalf of such Shareholders in respect of the relevant acceptance under the Stamp Duty Ordinance (Chapter 117 of the laws of Hong Kong).

No stamp duty will be deducted from the amount paid to the Optionholders who accept the Option Offer.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices which form part of the Offer Document.

Yours faithfully, For and on behalf of

TingKong-RexCapital Securities International Limited

Elizabeth Lee

Director

– 14 –

FURTHER TERMS OF THE OFFERS

APPENDIX I

1. FURTHER TERMS OF THE OFFERS

1.1 Procedure for acceptance of the Shares

• (a) If the Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in your name, and you wish to accept the Share Offer, you must send the “ PINK ” form of acceptance and transfer duly completed together with the relevant Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Share Registrar, Tengis Limited, at 4th Floor, Hutchison House, 10 Harcourt Road, Central Hong Kong.

• (b) If the Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in the name of a nominee company or some name other than your own, and you wish to accept the Share Offer, you must either:

• (i) lodge your Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) with the nominee company, or other nominee, with instructions authorising it to accept the Share Offer on your behalf and requesting it to deliver the form of acceptance and transfer duly completed together with the relevant Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Share Registrar; or

• (ii) arrange for the Shares to be registered in your name by the Company through the Share Registrar and send the “ PINK ” form of acceptance and transfer duly completed together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Share Registrar.

• (c) If you have lodged (a) transfer(s) of any of your Shares for registration in your name and have not yet received your Share certificate(s) and you wish to accept the Share Offer, you should nevertheless complete the “ PINK ” form of acceptance and transfer and deliver it to the Share Registrar together with the transfer receipt(s) duly signed by yourself. Such action will be deemed to be an irrevocable authority to the Offeror or its agent(s) to

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collect from the Company or the Share Registrar on your behalf the relevant Share certificate(s) when issued and to deliver such certificate(s) to the Share Registrar and to authorise and instruct the Share Registrar to hold such certificate(s), subject to the terms of the Share Offer, as if it was/they were delivered to the Share Registrar with the “ PINK ” form of acceptance and transfer.

• (d) If the Share certificate(s) and/or transfer receipt(s) and/or, any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) is/are not readily available and/or is/are lost and you wish to accept the Share Offer, the “ PINK ” form of acceptance and transfer should nevertheless be completed and delivered to the Share Registrar together with a letter stating that you have lost one or more of your Share certificate(s) and/or transfer receipt(s) and/or other documents of title or that it/they is/are not readily available. If you find such document(s) or if it/they becomes/become available, the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) should be forwarded to the Share Registrar as soon as possible thereafter. If you have lost your Share certificate(s), you should also write to the Share Registrar for a form of letter of indemnity which, when completed in accordance with the instructions given, should be retumed to the Share Registrar.

• (e) Acceptance of the Share Offer may, at the discretion of the Offeror, be treated as valid in whole or in part even if not entirely in order or accompanied by the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and, or any satisfactory indemnity or indemnities required in respect thereof) but, in such cases, the cheque for the consideration due will not be despatched until the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or a satisfactory indemnity or indemnities in respect thereof) has/have been received by the Share Registrar.

• (f) Seller’s ad valorem stamp duty for the Shares registered on the Hong Kong branch register arising in connection with the acceptance of the Share Offer will be payable by each Shareholder who accepts the Share Offer at the rate of HK$1 for every HK$1,000 or part thereof for the consideration payable by the Offeror in respect of the Shares being sold by such Shareholder. Such stamp duty will be deducted form the cash amount due to such Shareholder on acceptance of the Share Offer.

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• (g) No acknowledgement of receipt for any form(s) of acceptance and transfer, Share certificate(s), transfer receipt(s) and/or any other document(s) of title (and, or any satisfactory indemnity or indemnities required in respect thereof) will be given.

1.2 Procedure for acceptance of the Options

• (a) If the relevant document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Options is/are in your name, and you wish to accept the Option Offer, you must send the Form of Renunciation duly completed together with the relevant document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Share Registrar.

• (b) If the document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Options is/are in the name of a nominee company or some name other than your own, and you wish to accept the Option Offer, you must either:

• (i) lodge your relevant document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) with the nominee company, or other nominee, with instructions authorising it to accept the Option Offer on your behalf and requesting it to deliver the Form of Renunciation duly completed together with the relevant document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Share Registrar; or

• (ii) arrange for the Options to be registered in your name by the Company through the Share Registrar and send the Form of Renunciation duly completed together with the relevant document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Share Registrar.

• (c) No stamp duty will be deducted from the amount paid to the Optionholders who accept the Option Offer.

• (d) No acknowledgement of receipt for any Form(s) of Renunciation and/or any other document(s) of title (and, or any satisfactory indemnity or indemnities required in respect thereof) will be given.

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FURTHER TERMS OF THE OFFERS

APPENDIX I

2. ACCEPTANCE PERIOD AND REVISIONS

• (a) The Offeror reserves the right, subject to the Takeovers Code, to extend or revise the Offers after the despatch of this document, either in their respective terms and conditions or in the value or nature of the consideration offered or otherwise.

• (b) Unless the Offers have previously been extended or revised, the Offers will close on 20 June 2002.

• (c) If the Offers are extended or revised, the announcement of such extension or revision will state the next closing date. If the Offers are extended or revised, they will remain open for acceptance for a period of not less than 14 days from the posting of the written notification of the extension or revision to the Shareholders and the Optionholders and, unless previously extended or revised, shall be closed on the subsequent closing date. The benefit of any revision of the Offers will be available to any Shareholder and/or any Optionholder who has/ have previously accepted the Share Offer and/or the Option Offer (as the case may be). The execution by or on behalf of any Shareholder who has previously accepted the Share Offer or any Optionholder who has previously accepted the Option Offer, as the case may be, of any form(s) of acceptance and transfer or any Form of Renunciation (as the case may be) shall be deemed to constitute acceptance of the revised Share Offer or Option Offer (as the case may be) unless such holder becomes entitled to withdraw his or her acceptance and duly does so.

• (d) In order to be valid, acceptances must be received by the Share Registrar in accordance with the instructions printed on the relevant form(s) of acceptance and transfer or Form(s) of Renunciation by 4:00 p.m. on 20 June 2002, unless the Offers are extended or revised.

• (e) The Offeror may introduce new conditions to be attached to any revision to any of the Offers, or any subsequent revision thereof but only to the extent necessary to implement the revised Offers and subject to the consent of the Executive.

• (f) If the closing date of the Offers is extended, any reference in this document and in the forms of acceptance to the closing date shall, except where the context otherwise requires, be deemed to refer to the closing date of the Offers as so extended.

3. ANNOUNCEMENTS

By 6:00 p.m. on the First Closing Date, or such later time and/or date as the Executive may agree, the Offeror shall inform the Executive and the Stock Exchange of its intentions in relation to the revision, extension, expiry or unconditionality of the Offers. The Offeror shall publish a teletext announcement through the Stock Exchange by 7:00 p.m. on the closing date

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FURTHER TERMS OF THE OFFERS

APPENDIX I

of the Offers stating whether the Offers have expired, or have been revised or extended or have become or been declared unconditional. The Offeror shall publish an announcement on the next business day stating whether the Offers have been revised, extended or have expired or have become or been declared unconditional. The announcement shall state the total number of Shares and Options:

• for which acceptances of each of the Share Offer and the Option Offer have been received;

• held, controlled or directed by the Offeror or persons acting in concert with it before the offer period; and

• acquired or agreed to be acquired during the offer period by the Offeror or any parties acting in concert with it.

The announcement shall include the details of voting rights, rights over shares, derivatives and arrangements as required by Rules 3.5(c), (d) and (f) of the Takeovers Code. The announcement shall also specify the percentages of the issued share capital, and the percentages of voting rights, as represented by such number of Shares acquired by the Offeror.

In computing the number of Shares and Options represented by acceptances, there may be included or excluded, for announcement purposes, acceptances which are not in all respects in order or are subject to verification. The number of these acceptances will be separately stated.

All announcements in respect of the Offers will be made in accordance with the requirements of the Takeovers Code and the Listing Rules.

4. RIGHT OF WITHDRAWAL

An acceptor of the Share Offer shall be entitled to withdraw his acceptance any time after 21 days from the First Closing Date if the Share Offer has not by then become unconditional as to acceptances by notice in writing signed by the acceptor or his agent duly appointed in writing and evidence of whose appointment is produced with the notice to the Share Registrar but such entitlement to withdraw shall be exercisable only until such time as the Share Offer becomes or is declared unconditional as to acceptances. In addition, if the Offeror is unable to comply with any of the requirements to announce the results of the Share Offer pursuant to the Takeovers Code, the Executive may require that the acceptors be granted a right of withdrawal, on terms acceptable to the Executive, until such requirements can be met. Save as aforesaid, acceptances shall be irrevocable.

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FURTHER TERMS OF THE OFFERS

APPENDIX I

5. SHARES AND OPTIONS TENDERED FOR ACCEPTANCE UNDER THE OFFERS

Acceptances of the Offers by a person or persons will be deemed to constitute a warranty by such person or persons to the Offeror that the Shares acquired and/or the Options cancelled under the Offers are sold or held by such person(s) free from all claims, equities, liens, charges, encumbrances, rights of pre-emption and any other third party rights of any nature and together with all rights attaching to them, including, without limitation, in respect of the Shares the right to receive in full all dividends and other distributions, if any, declared, made or paid after 23 May 2002.

6. OVERSEAS HOLDERS

The making of the Offers to overseas holders may be prohibited or affected by the laws of the relevant jurisdictions. Overseas holders of the Shares and/or Options should inform themselves about and observe any and all applicable legal requirements. It is the responsibility of each overseas holder wishing to accept the Offers to satisfy himself or herself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required and the compliance with other necessary formalities or legal requirements. Any such overseas holder will be responsible for any such transfer or other taxes by whomsoever payable and the Offeror, TKR Securities and any person acting on their behalf shall be entitled to be fully indemnified and held harmless by such overseas shareholder for any such transfer or other taxes as such person may be required to pay. Acceptances of the Offers by any such person will constitute a warranty by such person that such person is permitted under all applicable laws to receive and accept the Offers, and any revision thereof, and such acceptance shall be valid and binding in accordance with all applicable laws.

7. FORM OF ACCEPTANCE AND TRANSFER

Each Shareholder and Optionholder by whom, or on whose behalf, a form of acceptance and transfer or a Form of Renunciation (as the case may be) is executed irrevocably undertakes, represents, warrants and agrees to and with the Offeror and TKR Securities, so as to bind him or her, his or her personal representatives, heirs, successors and assigns, to the following effect:

• (a) that the execution of the relevant form of acceptance and transfer and/or the Form of Renunciation (as the case may be) whether or not any boxes are completed shall constitute:

• (i) an acceptance of the Share Offer and/or the Option Offer (as the case may be) in respect of the number of Shares and/or the Options (as the case may be) inserted or deemed to be inserted in such form on and subject to the terms and conditions set out or referred to in this document and in such

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FURTHER TERMS OF THE OFFERS

APPENDIX I

form and that, subject only to the rights of withdrawal set out or referred to in paragraph 4 of this Appendix, each such acceptance and election shall be irrevocable; and

• (ii) an undertaking to execute any further documents, take any further actions and give any further assurances which may be required in connection with the foregoing including, without limitation, to secure the transfer of the Shares and/or the Options (as the case may be) in respect of which he or she has accepted or is deemed to have accepted the Share Offer and/or the Option Offer, as the case may be, to the Offeror and the benefit of all dividends and distributions paid, made or declared on or after 23 May 2002;

• (b) the Shares acquired under the Share Offer or the Options acquired under the Option Offer are sold by such person or persons free from all claims, equities, liens, charges, encumbrances, rights of pre-emption and any other third party rights of any nature and together with all rights attaching to them, including, without limitation, in respect of the Shares, the right to receive in full all dividends and other distributions, if any, declared, made or paid after 23 May 2002;

• (c) if such acceptor is an overseas holder, that he or she has observed the laws of all relevant territories, obtained any and all requisite governmental or other consents, complied with all requisite formalities and paid any and all transfer or other taxes due from him or her in connection with such acceptance in any territory, that he or she has not taken or omitted to take any action which will or may result in the Offeror, TKR Securities or any other person acting on their behalf being in breach of the legal or regulatory requirements of any territory in connection with the Offers or his or her acceptance thereof and he or she is permitted under all applicable laws to receive and accept the Offers (and any revision thereof), and that such acceptance is valid and binding in accordance with all applicable laws;

• (d) that such Shareholder or Optionholder (as the case may be) will deliver or procure the delivery to the Share Registrar at the address referred to in paragraph 1.1(a) of this Appendix of his or her Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title and/or any satisfactory indemnity or indemnities in respect thereof (as the case may be) in respect of all Shares or Options (as the case may be) held by him or her in respect of which the Share Offer or the Option Offer (as the case may be) has been accepted or is deemed to have been accepted and not validly withdrawn, or an indemnity acceptable to the Offeror in lieu thereof, as soon as possible;

• (e) that the execution and delivery of the relevant form(s) of acceptance and transfer and/or the Form(s) of Renunciation (as the case may be) to the Share Registrar constitute a separate and irrevocable authority and request to the Offeror to procure the despatch by post of a cheque in respect of any cash payment in connection

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APPENDIX I

FURTHER TERMS OF THE OFFERS

with the Offers, at the risk of such Shareholder or Optionholder (as the case may be), to the person or agent whose name and address are set out in the relevant form(s) of acceptance and transfer and/or the Form(s) of Renunciation (as the case may be) or, if none is set out, to the first-named or the sole registered holder of the relevant Shares or Options (as the case may be) at his or her registered address;

• (f) that the provisions of the relevant form of acceptance and transfer and the Form of Renunciation shall be incorporated in and form part of the terms of the Offers;

• (g) that in relation to any of the Offers, he or she will do all such acts and things as shall be necessary or expedient to vest in the Offeror, or its nominees or such other person as it may decide, the Shares or Options (as the case may be) to which such acceptance relates;

• (h) that he or she submits, in relation to all matters arising out of the Offers and all acceptances, to the jurisdiction of the courts of Hong Kong;

• (i) acceptance of the Offers by any nominee will be deemed to constitute a warranty by such nominee to the Offeror that the number of Shares or Options (as the case may be) indicated in the relevant form of acceptance and transfer or the Form of Renunciation (as the case may be) is the aggregate number of Shares or Options (as the case may be) held by such nominee for such beneficial owners who are accepting the Offers;

• (j) the Offers and all acceptances thereof, the form of acceptance and transfer, the Form of Renunciation and all contracts made pursuant to the Offers, and all action taken or made or deemed to be taken or made pursuant to these terms are governed by and shall be construed in accordance with the laws of Hong Kong. Execution of a form of acceptance or a Form of Renunciation by or on behalf of the relevant Shareholder or Optionholder (as the case may be) will constitute such holder’s submission in relation to all matters arising out of the Offers and the relevant form of acceptance and transfer or the Form of Renunciation (as the case may be) to the jurisdiction of the courts of Hong Kong and the holder’s agreement that nothing shall limit the right of the Offeror or TKR Securities to bring an action, suit or proceeding arising out of or in connection with the creation, validity, effect, interpretation or performance of the legal relations established in relation to the Offers and the acceptances in any other manner permitted by law or in any court of competent jurisdiction;

• (k) in relation to any acceptance of any of the Offers in respect of a holding of Shares or Options (as the case may be) which is in uncertificated form, the Offeror reserves the right to make such alterations, additions or modifications as may be necessary or desirable to give effect to any purported acceptance of any

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APPENDIX I

of the Offers whether in order to comply with the facilities or requirements of CCASS or otherwise, provided such alterations, additions or modifications are consistent with the requirements of the Takeovers Code or are otherwise made with the consent of the Executive;

• (l) the terms, provisions, instructions and authorities contained in or deemed to be contained in the form of acceptance and transfer and the Form of Renunciation constitute part of the terms of the Offers. The provisions of this Appendix shall be deemed to be incorporated into the form of acceptance and transfer and the Form of Renunciation; and

• (m) due execution of the form of acceptance and transfer and/or the Form of Renunciation (as the case may be) in respect of the Offers will constitute an authority to the Offeror, TKR Securities, any director of the Offeror or of TKR Securities or their respective agents to complete and execute on behalf of the Shareholders who accept the Share Offer the form of acceptance and transfer and/ or the Optionholders who accept the Option Offer the Form of Renunciation, and any document and, in relation to the Offers, to do any other act that may be necessary or expedient for the purpose of vesting in the Offeror, or such person or persons as the Offeror shall direct, the Shares, in respect of which such person(s) has/have accepted the Share Offer or renouncing the rights under the Option Offer.

8. GENERAL

• (a) All communications, notices, forms of acceptance and transfer, Forms of Renunciation, certificates, transfer receipts and other documents of title or of indemnity or of any other nature to be delivered by or sent to or from the Shareholders and the Optionholders will be delivered by or sent to or from them, or their designated agents, at their own risk, and none of the Offeror, TKR Securities nor the Share Registrar accepts any liability for any loss or any other liabilities whatsoever which may arise as a result.

• (b) The provisions set out in the form of acceptance and transfer and the Form of Renunciation form part of the terms of the Offers.

• (c) Notwithstanding any other provision in this Appendix, the Offeror and TKR Securities reserve the right to treat acceptances as valid if received by or on behalf of either of them at any place or places or in any manner determined by either of them otherwise than as set out in this document or in the form of acceptance and transfer or the Form of Renunciation.

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FURTHER TERMS OF THE OFFERS

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• (d) The English text of this document, the forms of acceptance and transfer and the Forms of Renunciation shall prevail over the Chinese text.

• (e) The accidental omission to despatch this document and/or the accompanying form of acceptance and transfer and/or the Form of Renunciation which may be obtained by the Optionholders at the principal place of business of the Company in Hong Kong, Room 2201-6, 22nd Floor, Worldwide House, 19 Des Voeux Road Central, Hong Kong or any of them to any person to whom the Offers are made will not invalidate the Offers in any way. The deliberate omission, if any, to despatch this document and/or the form of acceptance and/or the Form of Renunciation which may be obtained by the Optionholders at the principal place of business of the Company in Hong Kong, Room 2201-6, 22nd Floor, Worldwide House, 19 Des Voeux Road Central, Hong Kong, will not invalidate the Offers in any way.

• (f) If, in the course of the Offers, the Offeror revises the terms of the Offers, all Shareholders or Optionholders, whether or not they have already accepted the Offers, will be entitled to the revised terms. The revised Offers must be kept open for at least 14 days following the date on which the revised Offer document is posted.

• (g) Settlement of the consideration to which any Shareholder or Optionholder (as the case may be) is entitled under any of the Offers will be implemented in full in accordance with the terms of the relevant Offers without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Shareholder or Optionholder (as the case may be).

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GENERAL INFORMATION

APPENDIX II

RESPONSIBILITY STATEMENT

1. The issue of the Offer Document has been approved by the sole director of the Offeror.

2. This document includes particulars given in compliance with the Securities Ordinance and the Takeovers Code for the purpose of giving information with regard to the Offeror and the Offer.

3. The sole director of the Offeror accepts full responsibility for the accuracy of the information in the Offer Document and confirms, having made all reasonable enquiries, that to the best of his knowledge, opinions expressed in the Offer Document have been arrived at after due and careful consideration and there are no other facts not contained in the Offer Document the omission of which would make any statements in the Offer Document misleading.

4. The information on the Group in the Offer Document has been extracted from the published interim and annual reports of the Group and from previously published information available as at the Latest Practicable Date. The sole director of the Offeror takes full responsibility that such information has been accurately extracted.

MARKET PRICES

The table below shows the closing prices of each Share as quoted on the Stock Exchange:

• (a) on the last trading day of each of the 6 months preceding the date of the Announcement;

• (b) on 24 April 2002, being the last trading day immediately preceding the date of the Announcement; and

• (c) on the Latest Practicable Date:

	Closing price
	per Share
	(HK$)
31 October 2001	0.265
30 November 2001	0.360
31 December 2001	0.340
31 January 2002	0.320
28 February 2002	0.465
28 March 2002	0.400
24 April 2002	0.570
Latest Practicable Date	0.640

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GENERAL INFORMATION

APPENDIX II

The highest and lowest prices per Share as quoted on the Stock Exchange during the six-month period immediately preceding the date of the Announcement and the Latest Practicable Date were HK$0.79 on 21 February 2002 and HK$0.265 on 26 October 2001 and from 29 October 2001 to 31 October 2001 respectively.

DISCLOSURE OF INTERESTS AND DEALINGS IN THE SECURITIES OF THE COMPANY

There have been no dealings in the Shares by the director of the Offeror, the Offeror or parties acting in concert with it during the period of six months immediately preceding the date of the Announcement and ending on the Latest Practicable Date.

STAMP DUTY

Seller’s ad valorem stamp duty arising in connection with the acceptance of the Share Offer, at the rate of HK$1.00 for every HK$1,000 or part thereof for the consideration payable in respect of the Shares being sold by the Shareholders who accept the Share Offer, will be payable by such shareholders and will be deducted from the consideration payable on acceptance of the Share Offer. No stamp duty will be deducted from the consideration payable to the Optionholders who accept the Option Offer.

MISCELLANEOUS

1. No benefit will be given to any director of the Company or any of its subsidiaries as compensation for loss of office or otherwise in connection with the Offers.

2. Save for the irrevocable undertaking given by the Undertaking Shareholder to the Offeror, no agreement, arrangement or understanding (including any compensation arrangement) between the Offeror or any person acting in concert with it or any of the directors, recent directors, shareholders or recent shareholders of the Company which has any connection with or dependence upon the Offers.

3. No agreement, arrangement or understanding exists whereby any securities to be acquired in pursuance of the Offers will be transferred to any other persons.

4. None of the Offeror or any person acting in concert with the Offeror has entered into any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code.

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GENERAL INFORMATION

APPENDIX II

CONSENT

REXCAPITAL and TKR Securities have given and have not withdrawn their respective written consents to the issue of the Offer Document with the inclusion of their letter and references to their names in the form and context in which they respectively appear.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available at the office of REXCAPITAL at Suite 3203, 9 Queen’s Road Central, Central, Hong Kong during normal business hours for so long as the Offers remain open for acceptance:

1. the letter from the Offeror the text of which is set out on pages 5 to 6;

2. the letter from TKR Securities containing details of the Offers;

3. the letters of consent referred to in the paragraph “Consent” of this Appendix;

4. the irrevocable undertaking to the Offeror from the Undertaking Shareholder; and

5. memorandum and articles of association of the Offeror.

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