Hony Media Group — M&A Activity 2004

Nov 5, 2004

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.

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CHINA STRATEGIC HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability)

(stock code: 235)

MEMORANDUM OF UNDERSTANDING IN RESPECT OF POSSIBLE ACQUISITION OF INTEREST IN OR ASSETS OF ASSO LIMITED

This announcement is made pursuant to Rule 13.09 of the Listing Rules.

The Board wishes to announce that on 4th November 2004, Group Dragon Limited, a wholly-owned subsidiary of the Company, entered into the MOU for the proposed acquisition of interest in or assets of Asso Limited and/or its subsidiaries.

The Board wishes to emphasise that no binding agreement in relation to the Proposed Acquisition has been entered into as at the date of this announcement. In the event that a binding agreement is entered into by the Company in relation to the Proposed Acquisition, it may constitute a notifiable transaction of the Company under the Listing Rules. As the Proposed Acquisition may or may not be entered into, investors and shareholders of the Company are urged to exercise caution when dealing in the shares of the Company.

This announcement is made pursuant to Rule 13.09 of the Listing Rules.

The board (“ Board ”) of directors of China Strategic Holdings Limited (“ Company ”) wishes to announce that Group Dragon Limited, a wholly-owned subsidiary of the Company, has entered into a memorandum of understanding dated 4th November 2004 (“ MOU ”) with two third parties who are independent of the Company and not connected with the connected person of the Company (as defined in the Listing Rules). The MOU has set out the basic understanding in relation to the proposed acquisition (“ Proposed Acquisition ”) of interest in or assets of Asso Limited and/or its subsidiaries (including 保定依棉集團有限公司 (Baoding Yimian Group Co., Ltd.)). Asso Limited is an investment holding company and its subsidiaries are principally engaged in textiles and garment business. The consideration of the Proposed Acquisition is expected to be in the range of HK$200 million subject to adjustment with reference to, among others, the net asset value of the interest or assets to be acquired.

The MOU does not constitute the parties’ legally binding commitment in respect of the Proposed Acquisition. The Proposed Acquisition is subject to the execution and completion of the formal sale and purchase agreement in relation thereto by the parties.

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The Board wishes to emphasise that no binding agreement in relation to the Proposed Acquisition has been entered into as at the date of this announcement. In the event that a binding agreement is entered into by the Company in relation to the Proposed Acquisition, it may constitute a notifiable transaction of the Company under the Listing Rules. As the Proposed Acquisition may or may not be entered into, investors and shareholders of the Company are urged to exercise caution when dealing in the shares of the Company. Further announcement in respect of the Proposed Acquisition will be made by the Company should the formal sale and purchase agreement has been entered into.

By Order of the Board of China Strategic Holdings Limited Jenny Chan Secretary

Hong Kong, 4th November 2004

Executive Directors:—

Dr. Chan Kwok Keung, Charles Dr. Yap, Allan Mr. Li Wa Kin Ms. Chau Mei Wah, Rosanna Ms. Chan Ling, Eva Mr. Chan Kwok Hung (Alternate to Dr. Chan Kwok Keung, Charles)

Independent Non-Executive Directors:— Mr. David Edwin Bussmann Ms. Fung Wan Yiu, Agnes Mr. Wong King Lam, Joseph

Mr. Lui Siu Tsuen, Richard (Alternate to Dr. Yap, Allan)

Please also refer to the published version of this announcement in the China Daily.

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