Honbridge Holdings Limited — M&A Activity 2002

Mar 5, 2002

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities.

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.

JESSICA PUBLICATIONS LIMITED

(Incorporated in the Cayman Islands with limited liability)

MEMORANDUM OF UNDERSTANDING

in respect of the proposed acquisition of 50% of the registered capital of Open

The Board is pleased to announce that on 27th February, 2002 the Company has entered into a MOU with Open and Mr. Liu Bo, an independent third party in relation to the proposed acquisition of 50% of the registered capital of Open.

Open is principally engaged in the advertising business in the PRC. Open is in the process of getting all relevant consents and approvals to operate the business of the Nine Magazines (namely

). Upon obtaining all the above relevant consents and approvals, the principal activities of Open will be the operation of the Nine Magazines.

As stated in the MOU and advised by the Hong Kong and the PRC legal advisers, the MOU is non-legally binding, subject to the execution of a definitive agreement, relevant board approvals and the GEM Listing Rules.

As the above proposed acquisition may or may not take place, shareholders of the Company and public investors of the Company are advised to exercise caution when dealing in the Shares. Further announcement will be made to update the market on any new developments.

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Based on the market price of the Shares as at 27th February, 2002 and the number of Consideration Shares, the proposed acquisition, if materialised, would constitute a very substantial acquisition under Chapter 19 of the GEM Listing Rules.

Trading in the securities of the Company has been suspended with effect from 10:00 a.m. on 28th February, 2002 and application has been made for resumption of trading with effect from 10:00 a.m. on 6th March, 2002.

The Board is pleased to announce that on 27th February, 2002, the Company has entered into the MOU with Open and Mr. Liu Bo in relation to the proposed acquisition of Open, major terms of the MOU are set out below.

MOU

Date: 27th February, 2002

Parties under the proposed transaction:

Purchaser: the Company

Vendor: Mr. Liu Bo, a person independent from the Directors or chief executive or substantial shareholders or management shareholders of the Company or any of their respective associates (as defined in the GEM Listing Rules).

Equity interest proposed to be acquired by the Company:

50% of the registered capital of Open. Open will become an associate company of the Company upon completion of the proposed acquisition.

Consideration in respect of the proposed acquisition:

It is intended that if the proposed transaction takes place, the Consideration will be satisfied by way of the issuance and allotment by the Company of a total of 60,780,000 new Shares (credited as fully paid) (representing approximately 12.0% of the Existing Capital and approximately 10.7% of the Enlarged Capital) to Open on or before 30th October, 2002 or such other date as may be agreed between the parties.

It is the present intention of Mr. Liu Bo that the Consideration Shares will amount to approximately 12.0% of the Existing Capital and the future recipient

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of the Consideration Shares will be Open. The Consideration was arrived at after arm’s length negotiations and based on the future prospects of Open. The Consideration is subject to the finalisation of the relevant definitive agreement and therefore may change.

Completion date of the definitive agreement for the proposed acquisition:

Completion of the definitive agreement for the proposed acquisition, if entered into by the parties, shall take place on or before 30th October, 2002 or two business days after all the relevant conditions precedent are fulfilled (or waived by the Company), whichever is earlier or on such other date as the parties may from time to time agree in writing.

Conditions precedent of the definitive agreement for the acquisition:

Completion of the definitive agreement, if entered into, will be subject to and conditional upon, inter alia, the satisfaction or waived by the Company of the following:

• a) the definitive agreement for the proposed acquisition being approved by the GEM Listing Committee of the Stock Exchange, if necessary, and shareholders of the Company at its EGM;

• b) all necessary approvals being obtained with respect to the definitive agreement for the proposed acquisition including, among other things, approvals and regulations required by any relevant regulatory authorities;

• c) no action or proceeding being pending or threatened by any third party to restrict or prohibit the above conditions precedent of the definitive agreement for the proposed acquisition;

• d) the Company having been granted approval by the GEM Listing Committee of the Stock Exchange of the listing of and permission to deal in the Consideration Shares;

• e) the Company having been satisfied with the result of the due diligence exercise carried out by it or its representatives on the assets and liabilities, business, prospect and legal aspects of Open;

• f) all the relevant consents and approvals to operate the business of the Nine Magazines having been obtained by Open; and

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g) the definitive agreement for the proposed acquisition will not affect Open to get the rights to operate the business of the Nine Magazines.

Warranties and guarantees of the definitive agreement for the proposed acquisition:

Under the proposed terms of the definitive agreement,

• a) Open guarantees that it will not sell, mortgage or transfer the Consideration Shares within 18 months after completion of the definitive agreement for the proposed acquisition (“Lock-up Period”) and place the Consideration Shares in an escrow agreed by Open and the Company until 15th January, 2004 or two business days after the Company receives from Open the audited financial report on Open in respect of the financial period ending 31st December, 2003 (“Disposal Date”), whichever is later. If the Disposal Date is later than the Lock-up Period, Open can dispose the Consideration Shares but subject to the condition mentioned in (b) below;

• b) Open may only sell the Consideration Shares after the completion of the issue of the Consideration Shares to Open if the average closing price of the Shares for ten consecutive trading days as quoted on the Stock Exchange is above HK$1.5, Open should maintain RMB 33,500,000 (if the proceeds from disposal of the Consideration Shares is lower than RMB33,500,000, Open should maintain all proceeds from disposal of the Consideration Shares and the remaining nondisposed Consideration Shares) in the escrow till the Disposal Date as a pledge in fulfilling the guarantee mentioned in (c) below;

• c) Open guarantees that its net asset value should not be less than RMB7,000,000 and RMB33,500,000 at the date of the completion of the definitive agreement for the acquisition and 31st December, 2003 respectively and the profit after tax (prepared in accordance with the accounting principles generally accepted in Hong Kong) should not be less than RMB18,000,000 and RMB8,500,000 for the years ending 31st December, 2002 and 2003 respectively;

• d) Mr. Liu Bo guarantees that he will be responsible for any losses and operating deficit of Open and the Company will not be required to inject any capital into Open within 2 years after the date of the Completion of the definitive agreement for the proposed acquisition;

• e) Mr. Liu Bo and Open guarantees that Open and the operation of the Nine Magazines does not have any litigation, liabilities, contingent liabilities, mortgage, guarantee and loans to other parties except those are disclosed and agreed;

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• f) Mr. Liu Bo guarantees that Open will have the preferential rights in operating in other periodicals from Mr. Liu Bo and his Associates after completion of the definitive agreement for the proposed acquisition; and

• g) Mr. Liu Bo guarantees to compensate the Company within seven days after Open fails to fulfil the guarantees mentioned in (c) above on the specified date.

INFORMATION ON OPEN

Established in October 2000, Open is principally engaged in the advertising business in the PRC as an advertising agent. Open is in the process of getting all relevant consents and approvals to operate the business of the Nine Magazines, namely . Upon obtaining all the above relevant consents and approvals, the Nine Magazines will be injected into Open and the principal activities of Open will be the operation of the Nine Magazines. As advised by Open, as at 31st December, 2001, the unaudited net tangible assets of Open was approximately RMB589,201 (approximately HKD555,850). The registered capital of Open is approximately RMB666,700 (approximately HKD628,962). As advised by Open, the Nine Magazines had not been injected into Open as at 31st December, 2001, the unaudited net tangible assets of Open as at 31st December, 2001 did not include that of the Nine Magazines. The Company is in the process of getting information about the Nine Magazines. Such information will be incorporated in the circular to shareholders after a definitive agreement is entered into by the Company and the two other parties.

REASONS FOR ENTERING INTO THE MOU

The Directors consider that the proposed acquisition of equity interest in Open, especially the operation of Nine Magazines, will enhance its potential development of the magazine publication related business in the PRC.

The Directors are of the view that the proposed acquisition, if materialised, will be in the interest of the Company and its shareholders. After entering into the MOU, the Company can commence a fundamental due diligence process.

The proposed acquisition of equity interest in Open is in line with the statement of business objective of the Group as disclosed in the Company’s prospectus dated 31st December, 2001. The Directors are of the view that the proposed transaction is within the Group’s business objectives which are, among others

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• to increase revenue from advertising and circulation;

• to launch new titles to access other different market segments; and

• to expand its business into other Chinese-speaking markets such as the PRC and Taiwan.

GENERAL

As stated in the MOU and advised by the Hong Kong and the PRC legal advisers, the MOU is non-legally binding, subject to the execution of the definitive agreement, the relevant board approvals and the GEM Listing Rules. There are no conditions in the MOU that require the parties to enter into the definitive agreement for the proposed acquisition and there is no binding exclusivity clause in the MOU.

No deposit has been paid to Open in respect of the acquisition. The definitive agreement will not be entered into before 8th July, 2002 but shall take place on or before 30th October, 2002 or two business days after all the relevant conditions precedent are fulfilled (or waived by the Company), whichever is earlier or on such other date as the parties may from time to time agree in writing.

The Company was aware of this business opportunity after the date of the Company’s prospectus (i.e. 31st December, 2001). Initial discussion started in February 2002.

It is the Company’s present intention to enter into the definitive agreement provided that it will be satisfied with the outcome of the fundamental due diligence process.

A further announcement will be made upon the signing of the definitive agreement and a circular containing details of the transaction will be despatched to the shareholders of the Company. As the above proposed acquisition may or may not take place, shareholders of the Company and public investors of the Company are advised to exercise caution when dealing in the Shares. Further announcement will be made to update the market on any new developments.

Based on the market price of the Shares as at 27th February, 2002 and the number of Consideration Shares, the proposed acquisition, if materialised, would constitute a very substantial acquisition under Chapter 19 of the GEM Listing Rules.

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The principal activity of the Group is the publication of monthly Chinese language magazines for female readers, namely “Jessica” magazine and “Lisa” magazine. It is stipulated in the MOU that, subject to completion of the definitive agreement for the proposed acquisition, (a) the board of Open will consist of six directors of whom three will be nominated by the Company and three by Mr. Liu Bo (assuming the remaining 40% of equity interest in Open will be acquired by Mr. Liu Bo after completion of the proposed acquisition); and (b) Open can nominate one person to join the board of the Company.

At the request of the Company, trading in the securities of the Company on the Stock Exchange has been suspended with effect from 10:00 a.m. on 28th February, 2002. Application has been made for the resumption of trading in the securities of the Company with effect from 10:00 a.m. on 6th March, 2002.

DEFINITIONS

• “Associates”

having the meanings ascribed to it under the GEM Listing Rules

• “Board” the board of Directors

• “Consideration” the total consideration payable by the Company for the definitive agreement for the acquisition

• “Consideration the 60,780,000 Shares credited as fully paid at Shares” HKD0.001 per Share to be allotted and issued to Open

• “Company”

• Jessica Publications Limited

• “Director(s)” the director(s) of the Company

• “EGM” an extraordinary general meeting of the Company to be convened for approving, amongst other things, the Agreement and the transaction contemplated thereunder

• “Enlarged Capital” 567,259,876 Shares in issue upon completion of the proposed acquisition assuming that there are no further issues of Shares from 27th February, 2002 to the date of completion of the proposed acquisition other than the Consideration Shares

• “Existing Capital” 506,479,876 Shares in issue as at 27th February, 2002

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“GEM” the Growth Enterprise Market of the Stock Exchange “GEM Listing Rules” the Rules Governing the Listing of Securities on the GEM of the Stock Exchange “Group” the Company and its subsidiaries “HKD” Hong Kong dollars “Hong Kong” the Hong Kong Special Administrative Region of the PRC “MOU” a non-legally binding memorandum of understanding entered into between the Company, Open and Mr. Liu Bo dated 27th February, 2002 in connection with the proposed acquisition of 50% of the registered capital of Open by the Company “Nine Magazines” . The Nine Magazines are currently in distribution and are operated separately by different companies controlled by Mr. Liu Bo. “Open” (Beijing Open Advertising Company Limited), a limited liability company established in the People’s Republic of China. Beijing Open Advertising Company Limited is owned as to 60% by Mr. Liu Bo and 40% by Ms. Pan Ying, all these persons are independent from the Directors or chief executive or substantial shareholders or management shareholders of the Company or any of their respective associates (as defined in the GEM Listing Rules). It is expected that the 40% equity interest in Open owned by Ms. Pan Ying will be acquired by Mr. Liu Bo after completion of the proposed acquisition. Open and its Associates do not own any Shares as at the date of this announcement.

“PRC” the People’s Republic of China

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“Share(s)”

the share(s) of par value of HKD0.001 each in the capital of the Company

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

HKD=RMB1.06

By Order of the Board JESSICA PUBLICATIONS LIMTIED Chin Ching Han Company Secretary

Hong Kong, 5th March, 2002

This announcement will remain on the GEM website on the “Latest Company Announcements” page for at least 7 days from the day of its posting.

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