ICO Group Limited - Capital/Financing Update 2011

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

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

(Incorporated in Bermuda with limited liability)

(Stock Code : 630)

MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF A GROUP OF COMPANIES ENGAGED IN MANUFACTURING BUSINESS; CONTINUING CONNECTED TRANSACTIONS; AND RESUMPTION OF TRADING

THE ACQUISITION AGREEMENT

On 23 January 2011, the Company and the Purchaser entered into the Acquisition Agreement with the Vendors pursuant to which the Purchaser conditionally agreed to acquire and the Vendors conditionally agreed to sell the Sale Shares, being the entire issued share capital/registered capital of the Target Companies for a total consideration of HK$120 million (subject to adjustment). The Consideration shall be satisfied by the Purchaser as to (i) HK$15 million in cash; and (ii) HK$105 million (subject to adjustment) by way of the issue of the Convertible Notes to the Vendors (or their nominees).

For identification purposes only

The Target Companies started with fabrication of high-precision, high-cavitation tooling for the medical industry in 2005 when they first entered the medical manufacturing business. In 2005, they cooperated with a Tier 1 tool design house in the United States for augmenting their engineering expertise for high-cavition tools. The Target Companies were also qualified as approved vendors for supplying high-cavition tools to a global medical technology company in the United States. Subsequently in 2008, the Target Companies focused on the manufacture of medical devices, starting with lancet devices. In 2009, the Target Companies became qualified suppliers for the sale of components of disposal lancet device after passing the compliance audits performed by their customers and they started to supply these components to an FDA registered, ISO 13485:2003 certified engineering and manufacturing outsource service company in the United States.

The Acquisition constitutes a major transaction of the Company under Chapter 14 of the Listing Rules. As at the date of this announcement, Mr. Yip, being the Chairman and Managing Director of the Company and one of the Vendors, owns 3,000,000 Shares, representing approximately 0.2% of the existing issued share capital of the Company. Thus, Mr. Yip is a connected person of the Company. Accordingly, the Acquisition also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to requirements for reporting, announcement and approval by the Independent Shareholders at the SGM by way of poll under the Listing Rules.

THE PERFORMANCE INCENTIVE AGREEMENT

Pursuant to the Acquisition Agreement, the Company, the Purchaser and the Service Provider will enter into the Performance Incentive Agreement pursuant to which the Service Provider shall, subject to Completion, provide the Services to the Purchaser during the term of the Performance Incentive Agreement which is up until 31 December 2015, in consideration of which the Service Provider will be paid a monthly fee of HK$200,000 and the Performance Bonus equivalent to 30% of the excess of the combined profit before tax of the Titron Group over HK$10 million for each of the financial years.

The Service Provider is a company to be incorporated in Hong Kong and Mr. Yip will be one of the shareholders of the Service Provider. Accordingly, the provision of the Services by the Service Provider to the Purchaser upon Completion will constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As the aggregate annual amounts of the Continuing Connected Transactions will exceed the relevant percentage ratios as provided in Rule 14A.34 of the Listing Rules, the Continuing Connected Transactions will be subject to requirements for reporting, announcement and approval by the Independent Shareholders at the SGM by way of poll under the Listing Rules.

SGM

The Company will convene a SGM for the Independent Shareholders to consider and, if thought fit, to approve among other things: (i) the Acquisition Agreement and the transactions contemplated thereunder including the issue of the Convertible Notes and the Conversion Shares; and (ii) the Performance Incentive Agreement and the transactions contemplated thereunder including the issue of Performance Incentive Shares and the Caps.

The Vendors and their respective associates shall abstain from voting on the resolutions approving (i) the Acquisition Agreement together with the transactions contemplated thereunder and (ii) the Performance Incentive Agreement together with the transactions contemplated thereunder and the Caps.

An Independent Board Committee has been established to advise the Independent Shareholders in relation to the Acquisition, and the Continuing Connected Transactions and the Caps. The Independent Financial Adviser will be appointed to advise the Independent Board Committee and the Independent Shareholders in these regards.

GENERAL

A circular containing, among other things, (i) further details on the Acquisition Agreement; (ii) further details on the Performance Incentive Agreement and the Caps; (iii) the advice of the Independent Financial Adviser in relation to the Acquisition and the Continuing Connected Transactions and the Caps; (iv) the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Acquisition and the Continuing Connected Transactions and the Caps; (v) the financial information of the Group; (vi) the financial information of the Target Companies; (vii) the unaudited pro forma financial information on the Enlarged Group; (viii) the notice of the SGM; and (ix) other information as required under the Listing Rules will be sent to the Shareholders on or before 31 May 2011 as additional time is required to prepare the financial information of the Target Companies and the unaudited pro forma financial information on the Enlarged Group.

As the Acquisition Agreement and the Performance Incentive Agreement are subject to a number of conditions precedent, the Acquisition Agreement and the Performance Incentive Agreement may or may not become unconditional. Independent Shareholders and potential investors should exercise caution when dealing in the Shares and other securities of the Company.

SUSPENSION AND RESUMPTION OF TRADING

At the request of the Company, trading of the Shares on the Stock Exchange was suspended with effect from 9:30 a.m. on 24 January 2011 pending the release of this announcement. An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 26 January 2011.

THE ACQUISITION AGREEMENT

Date: 23 January 2011

Parties:

The issuer: The Company

Purchaser: Energy Best Investments Limited, a wholly-owned subsidiary of the Company which is newly incorporated to be used as the immediate holding company of the Target Companies upon Completion

Vendors: Vendor 1 (Mr. Lye Khay Fong); Vendor 2 (Mr. Yip);

Vendor 3 (Titron Group Holdings Limited); and

Vendor 4 (Chelin International Limited)

The Purchaser is a wholly-owned subsidiary of the Company incorporated in the BVI. Vendor 3 and Vendor 4 are investment holding companies incorporated in the BVI and Hong Kong respectively.

Vendor 3 is owned as to approximately 42.5% by Vendor 1, approximately 42.5% by Vendor 2 and approximately 15% by Mr. Lee. Vendor 2 is the Chairman and Managing Director of the Company and thus a connected person of the Company. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Vendor 1, Mr. Lee and Vendor 4 (including its beneficial owner) are the Independent Third Parties.

Assets to be acquired:

Pursuant to the Acquisition Agreement, the assets to be acquired by the Purchaser are the Sale Shares representing the entire issued share capital/registered capital of the Target Companies.

Target Companies comprise Titron International, Titron Industries, Titron Manufacturing, Titron Precision and Dongguan De Yue. As at the date of the Acquisition Agreement, Titron International and Titron Precision were each owned as to 50% by Vendor 1 and 50% by Vendor 2, Titron Industries and Titron Manufacturing were each wholly owned by Vendor 3, Dongguan De Yue was wholly owned by Vendor 4. Shareholding structure of the Target Companies immediately before Completion and shareholding structure of the New Group immediately after Completion are set out in the paragraph headed “Shareholding Structure of the Target Companies” below.

Upon Completion, each of the Target Companies will become wholly-owned subsidiaries of the Company, and the results of each member of the Target Companies will be consolidated into the consolidated financial statements of the Group. Further information relating to the businesses of the New Group is set out in the paragraph headed “Information on the New Group” below.

Consideration

The Consideration is to be satisfied by the following manner:

(i) as to HK$7.5 million payable by the Purchaser in cash upon Completion;
(ii) as to HK$105 million (subject to adjustment) payable to the Vendors (or their respective nominee(s)) by way of allotment and issue of the Convertible Notes upon Completion; and
(iii) as to HK$7.5 million (without interest) payable by the Purchaser in cash on or before 31 December 2011, failing which it shall be payable by the Company on or before 31 January 2012.

If the pro forma combined net profit after tax of Target Companies (excluding Titron Precision) as shown in the pro forma combined profit and loss accounts as extracted from the audited profit and loss account of each of the Target Companies (excluding Titron Precision) for the year ended 31 December 2010 is less than HK$8 million, the Consideration shall be reduced by 14.6 times the difference between HK$8 million and the pro forma combined net profit after tax of the Target Companies for the year ended 31 December 2010. The reduction of Consideration shall be made against the principal amount of Convertible Notes to be issued upon Completion and, for clarity, not against any of the other Consideration.

The Consideration was arrived at after arm’s length negotiations among the Company, the Purchaser and the Vendors and was determined taking into consideration the historical performance of the existing OEM manufacturing business and the growth potential of the medical device manufacturing business of the Target Companies as detailed in the paragraph headed “Reasons for the Acquisition” below. The Consideration values the entire equity interests of the Target Companies at HK$120,000,000 and represents a price-earnings multiple of approximately 14.6 times of the guaranteed profit of the Target Companies for the 12 months ending 31 December 2011 of HK$8 million. The Company intends to fund the cash consideration of the Acquisition by internal resources.

Terms of the Convertible Notes

The principal terms of the Convertible Notes to be issued by the Company are set out as follows:

Principal amount: HK$105 million (subject to adjustment) Maturity date: 31 December 2015 Conversion Price: HK$0.20 per Share (subject to anti-dilutive adjustments from the date of the Acquisition Agreement, including share consolidation and subdivision, bonus issue, rights issue at discount etc.)

Redemption: Unless previously converted or purchased or redeemed in accordance with the terms of the Convertible Notes, the Company shall redeem the Convertible Notes on the maturity date at 100% of the principal amount of the Convertible Notes then outstanding.
Interest: The Convertible Notes will be entitled to a payment equivalent to the amount of any cash dividends declared by the Company as if they were fully converted into ordinary shares payable at the same time as any such dividend payment.
Listing: The Convertible Notes will not be listed on the Stock Exchange or any other stock exchange. Application will be made by the Company to the Stock Exchange for the approval of the listing of and permission to deal in the Conversion Shares.

Voting: The Convertible Notes shall not carry any voting right.

Transferability: Freely transferable provided if such transferee is a connected person of the Company (as defined in the Listing Rules), the Company shall notify the Stock Exchange and comply with all applicable requirements under the Listing Rules.

Conversion period: Commencing on the date of issue of the Convertible Notes and ending 10 Business Days prior to the maturity date of the Convertible Notes

Security: The Company shall grant a first ranking legal charge over all of the issued shares of the Purchaser which shall be enforceable on any event of default as mentioned below, including without limitation a default in any of the obligations of Company.

The Share Charge shall be discharged as soon as reasonably practicable upon the date on which the Convertible Notes have been redeemed, surrendered or converted in full and if all present and future moneys, debts and liabilities due, owing or incurred by the Company to the holders of the Convertible Notes have been irrevocably paid in full.

Events of Default: Include without limitation (i) non-payment of principal amount within 10 Business Days of the due date; (ii) non-performance of any other covenant or agreement which is not remedied within 10 Business Days; (iii) certain events such as insolvency, winding up and bankruptcy and involuntary cessation of business; (iv) cross-default in relation to indebtedness of the Company or material subsidiaries; (v) any enforcement of security against the Company or any of its material subsidiaries; (vi) the delisting of the Company or the suspension of trading of Shares for more than 45 consecutive trading days etc.
Conversion No Convertible Notes may be converted, to the extent that following restriction: such exercise the Company would not maintain a public float of at least 25% as required under the Listing Rules.

The maximum of 525 million Conversion Shares (based on the principal amount of the Convertible Notes of HK$105 million and the Conversion Price of HK$0.20 per Conversion Share) to be issued upon full conversion of the Convertible Notes represent approximately 34.9% of the existing share capital of the Company, and approximately 25.9% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Notes. The issue of the Conversion Shares will be subject to a specific mandate to be sought from the Independent Shareholders at the SGM.

Conversion Price

The Conversion Price represents:

(i) a discount of approximately 24.5% to the closing price of HK$0.265 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 23.1% to the average of the closing prices of the Shares as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day of HK$0.260 per Share;
(iii) a discount of approximately 25.1% to the average of the closing prices of the Shares as quoted on the Stock Exchange over the last 10 consecutive trading days up to and including the Last Trading Day of HK$0.267 per Share; and
(iv) a premium of approximately 274.5% over the unaudited consolidated net asset value per Share attributable to the Shareholders of approximately HK$0.0534 as at 30 June 2010.

The Conversion Price was determined with reference to the prevailing market price of the Shares after taking into account the unaudited consolidated net asset value per Share as at 30 June 2010.

Profit guarantee and obligations in relation to the Convertible Notes

The Vendors irrevocably warrant and guarantee to the Company that the net profit after tax of the New Group for the financial year ending 31 December 2011, as shown in the pro forma combined financial statements of the New Group for the financial year ending 31 December 2011 shall not be less than HK$8 million, failing which the Vendors shall compensate the Company by 14.6 times the shortfall (subject to a maximum cap of HK$80,000,000) to be satisfied by the surrender of the equivalent principal amount of the Convertible Notes to the Company for cancellation.

Following the delivery of the pro forma combined financial statements of the New Group showing the net profit after tax of the New Group for the financial year ending 31 December 2011 equivalent to or more than HK$8 million, the Vendors undertake to exercise their conversion rights in respect of not less than HK$38 million of the principal amount of the Convertible Notes within 20 Business Days of such delivery of the aforesaid financial statements.

The Vendors covenant with the Company, for the duration of the period commencing on the Completion Date and ending on 18 months thereafter, to continue to hold sufficient Convertible Notes (without converting into Conversion Shares and free of encumbrances) to be available to be put towards settlement of potential claims under the warranties (subject to a maximum cap of HK$40,000,000) under the Acquisition Agreement.

Conditions Precedent

Completion shall be conditional upon the fulfillment or waiver of the following conditions:

(i) the Purchaser being reasonably satisfied with the results of the due diligence review to be conducted on the Target Companies;
(ii) the Vendors being reasonably satisfied with the results of the due diligence review to be conducted on the Company;
(iii) a copy of the pro forma combined profit and loss accounts of the Target Companies for the year ended 31 December 2010 having been delivered to the Purchaser showing a profit after taxation of not less than HK$7.2 million and a net asset value of not less than HK$25 million;
(iv) the passing by the Independent Shareholders at the SGM of the necessary resolutions to approve the Acquisition Agreement and the transactions contemplated thereunder, including without limitation, (a) the increase in authorised share capital (if necessary); (b) the issue of the Convertible Notes, the Conversion Shares to be issued upon the conversion of the Convertible Notes; (c) the entering into of the Performance Incentive Agreement; (d) the issue of the Performance Incentive Shares and the transactions contemplated thereunder, as required by the Listing Rules;

(v) the Purchaser having received a legal opinion issued by a firm of PRC lawyers appointed by the Purchaser covering, among other matters, the due incorporation and establishment, and the business and operation, of Dongguan De Yue, Yong Li and the wholly-foreign-owned enterprise to be formed by Titron Precision, in such form and substance to the reasonable satisfaction of the Purchaser;
(vi) the Listing Committee of the Stock Exchange granting listing of and permission to deal in the Conversion Shares;
(vii) if applicable, the approval of the Bermuda Monetary Authority in respect of the increase in authorised share capital of the Company and the allotment and issue of the Conversion Shares;
(viii) the Performance Incentive Agreement having been entered into by no later than 28 February 2011;
(ix) the release (in a form and substance reasonably satisfactory to the Purchaser and the Vendors) of the directors of the Target Companies from the personal guarantees given in respect of the banking facilities available to the Target Companies, and replacement corporate guarantee (in a form and substance reasonably satisfactory to the Purchaser and the Company) from the Company or any of its subsidiaries;
(x) the warranties given by the Vendors in the Acquisition Agreement remaining true and accurate in all material respects;
(xi) the warranties given by the Company in the Acquisition Agreement remaining true and accurate in all material respects;
(xii) the Shares continuing to be listed for trading on the Stock Exchange and there being no indication from the Stock Exchange that the Company will be delisted from trading on the Stock Exchange;
(xiii) there having been no suspension of trading of the Shares on the Stock Exchange of more than 10 consecutive trading days at any time prior to Completion, other than in connection with the Acquisition Agreement and the transactions contemplated thereunder;

(xiv) the banking facilities available to the Target Companies not having been withdrawn or terminated; and
(xv) all necessary authorizations, licences, consents and approvals required to be obtained from banks, landlords, third parties and relevant governmental authorities, if any, in respect of the transactions contemplated under the Acquisition Agreement having been obtained.

The Purchaser may at any time by notice in writing to the Vendors waive any conditions set out in (i), (iii), (v), (x) and (xiv). The Vendors may at any time by notice in writing to the Purchaser waive any conditions set out in (ii), (ix), (xi) and (xiii). If any of the above conditions has not been satisfied (or, as the case may be, waived by the Purchaser or the Vendors) at or before 12:00 noon on 31 August 2011 or such later date as the Purchaser and the Vendors may agree, the Acquisition Agreement shall cease and determine and neither party under the Acquisition Agreement shall have any obligations and liabilities thereunder save for any antecedent breaches.

Completion

Completion shall take place on the date falling the third Business Day after all the conditions set out in the paragraph headed “Conditions Precedent” above have been fulfilled (or, as the case may be, waived).

SHAREHOLDING STRUCTURE OF THE TARGET COMPANIES

Set out below is the shareholding structure of the Target Companies before Completion:

==> picture [481 x 149] intentionally omitted <==

----- Start of picture text -----

Vendor 1 Vendor 2 Mr. Lee
42.5% 42.5% 15%
Vendor 1 Vendor 2 An Independent Third Party
Vendor 3
50% 50% 100%
Vendor 4
100%(Note) 100%
100%
Titron Industries Titron Manufacturing
Titron International Titron Precision
Dongguan De Yue
100%
A wholly foreign owned
Yong Li enterprise being established
in the PRC
----- End of picture text -----

Note: Out of 1,000 issued ordinary shares of Titron Industries, 999 shares are held by Vendor 3 and 1 share is held by Vendor 1.

Set out below is the shareholding structure of the New Group immediately after Completion:

==> picture [478 x 181] intentionally omitted <==

----- Start of picture text -----

The Company
100%
The Purchaser
100% 100% 100% 100% 100%
Titron Industries Titron Manufacturing Titron International Titron Precision Dongguan De Yue
100%
A wholly foreign owned
Yong Li enterprise expected to have
been established in the PRC
----- End of picture text -----

INFORMATION ON THE NEW GROUP

Target Companies and the Purchaser

The Purchaser is a wholly-owned subsidiary of the Company which is newly incorporated to be used as the immediate holding company of the Target Companies upon Completion. The principal assets of the Purchaser upon Completion will be its investments in Titron Industries, Titron International, Titron Manufacturing, Titron Precision and Dongguan De Yue. Titron Industries was incorporated in Hong Kong on 3 December 1999 and holds the entire interest in Yong Li, being a wholly-foreign-owned enterprise established in the PRC on 2 September 2009. Vendor 2 is one of the founders of Titron Industries, Titron Manufacturing, Titron International and Titron Precision. As at the date of the Acquisition Agreement, the issued share capital of Titron Industries was HK$1,000 and the registered capital of Yong Li amounted to RMB100,000. Titron International was incorporated in Hong Kong on 6 February 2002 and has issued share capital of HK$1,000. Titron Manufacturing was incorporated in Hong Kong on 17 June 2008 and has issued share capital of HK$1,000. Titron Precision was incorporated in Hong Kong on 25 November 2010 and is in the process of establishing a wholly-foreign-owned enterprise in the PRC. Titron Precision has not commenced any business since its incorporation and has issued share capital of HK$1,000. Dongguan De Yue is a wholly-foreign-owned enterprise established in the PRC on 8 May 2007 with registered capital of HK$10,800,000. The principal activity of Titron Industries is trading of DVD boxes and related components. The principal activity of Titron International is trading of plastic related products and provision of advisory services. The principal activities of Titron Manufacturing and Dongguan De Yue are manufacturing of DVD boxes and related components and trading of plastic products. The principal activities of Titron Precision are expected to be manufacturing and trading of medical device. The principal activities of Yong Li are provision of consultation services.

The following information in relation to the business of the Target Companies is provided by the Vendors:

OEM Manufacturing Business

The Target Companies manufacture products on an OEM basis and do not possess their own brand names. They maintain a close working relationship with their customers on the manufacturing process and manufacture various products including, but not limited to, cable harness, volition, lint roller, disk marker, water tank, dispenser, security verifier, earplug, nozzle, bluray cases, DVD boxes and cosmetic display units in accordance with the specifications and requirements set out by each of their customers. They cooperate with some well known international brands. One of the subcontractors of the Target Companies of the OEM manufacturing business is a company owned by Mr. Chan Ping Che (and/or his associates) who is interested in 8.8% of the existing share capital of the Company. Upon Completion, the New Group will cease to engage this company as subcontractor.

Medical Device Manufacturing Business

In view of the promising prospects of the medical device industry, the Target Companies evolved to position themselves in the medical device manufacturing industry by enhancement of their production facilities and production procedures in order to meet the stringent qualification requirements and approval from regulatory authorities (e.g. FDA). With engineering design experience, high quality practical China-based manufacturing expertise, regulatory and clinical clearances for the products manufactured and high-volume and lowcost manufacturing, the Target Companies are equipped to become a leading manufacturer of medical device.

Subsequently in 2008, the Target Companies focused on the manufacture of medical devices, starting with lancet devices. In 2009, the Target Companies became qualified suppliers for the sale of components of disposal lancet device after passing the compliance audits performed by their customers and they started to supply these components to an FDA registered, ISO 13485:2003 certified engineering and manufacturing outsource service company in the United States. The end customers of this company are well-recognised pharmaceutical and healthcare companies in United States and Europe. The Target Companies produce components of medical device, lancet devices, in accordance with specifications and requirements. The components that the Target Companies manufacture are components of disposal lancet device used by diabetics for testing blood glucose that are precise and highly intuitive in the hands of patients and end-users.

According to the statistics of International Diabetics Federation, the estimated global diabetic population will be increased from 246 million in 2010 to 380 million in 2025. In view of the growing diabetic population, the New Group aims at positioning itself as a leading manufacturer of diabetic care products, in which all components of diabetic care products including lancet devices, needles, glucometer and testing strips will be manufactured and packaged at the New Group’s production facilities in the PRC.

With over 10 years experience in the manufacturing business, the Target Companies are equipped with multi-faceted manufacturing capabilities and diverse engineering expertise which are essential for engaging in the medical device manufacturing business. In addition, with the vision to be a quality, innovation and technology-centric total solutions provider, the Target Companies have also built comprehensive knowledge management framework and professional project management framework. It is expected that the medical device manufacturing business will become the core business of the New Group upon Completion in the coming years.

According to the existing business plan, upon Completion, the New Group targets to (i) develop and expand the channel distribution networks; (ii) expand scope of business in the field of medical devices, services and pharmaceuticals; (iii) upgrade to the manufacturer of Class 3 (as categorized under FDA) surgical devices; and (iv) introduce its products to the PRC market within five years. It is expected that the New Group will expand its medical device manufacturing business by recruiting professional and technical staff and further enhancement of its production facilities in the PRC.

Set out below is the consolidated financial information of Titron Industries for each of the two years ended 31 December 2008 and 2009, and the eight months ended 31 August 2010 prepared in accordance with the Hong Kong Financial Reporting Standard:

	For the	For the year ended	For the year ended
	eight months ended	31 December
	31 August 2010	2009	2008
	HK$’000	HK$’000	HK$’000
	audited	audited	audited
Turnover	84,445	142,762	146,415
Profit before taxation	6,211	2,266	1,712
Profit after taxation	5,223	1,847	1,439
	As at	As at 31 December
	31 August 2010	2009	2008
	audited	audited	audited
	HK$’000	HK$’000	HK$’000
Total assets	92,453	73,363	58,390
Net assets	19,025	20,759	18,912

Set out below is the financial information of Titron International for each of the two years ended 31 December 2008 and 2009, and the eight months ended 31 August 2010 prepared in accordance with the Small and Medium-sized Entity Financial Reporting Standards:

	For the	For the year ended	For the year ended
	eight months ended	31 December
	31 August 2010	2009	2008
	audited	audited	audited
	HK$’000	HK$’000	HK$’000
Turnover	12,079	1,179	697
Profit/(loss) before taxation	246	(612)	(916)
Profit/(loss) after taxation	246	(612)	(916)
	As at	As at 31 December
	31 August 2010	2009	2008
	audited	audited	audited
	HK$’000	HK$’000	HK$’000
Total assets	7,013	2,623	694
Net liabilities	(4,891)	(5,137)	(4,525)

Set out below is the financial information of Titron Manufacturing for the period since its incorporation to 31 December 2009, and the eight months ended 31 August 2010 prepared in accordance with the Hong Kong Financial Reporting Standards:

	For the	From the date of
	eight months ended	incorporation to
	31 August 2010	31 December 2009
	audited	audited
	HK$’000	HK$’000
Turnover	24,931	51,140
Profit before taxation	229	316
Profit after taxation	229	316
	As at	As at
	31 August 2010	31 December 2009
	audited	audited
	HK$’000	HK$’000
Total assets	19,403	20,106
Net assets	546	317

Set out below is the financial information of Titron Precision for the period since its incorporation to 31 December 2010 prepared in accordance with the Hong Kong Financial Reporting Standards:

	From the date of
	incorporation to
	31 December 2010
	unaudited
	HK$’000
Turnover	Nil
Loss before taxation	(8)
Loss after taxation	(8)

		As at
	31	December 2010
		unaudited
		HK$’000
Totl assets		56
Net liabilities		(7)

Set out below is the financial information of Dongguan De Yue for each of the two years ended 31 December 2008 and 2009, and eight months ended 31 August 2010 prepared in accordance with the PRC generally accepted accounting principles and the Hong Kong Financial Reporting Standards respectively :

	For the	For the year ended	For the year ended
	eight months ended	31 December
	31 August 2010	2009	2008
	audited	audited	audited
	HK$’000	RMB’000	RMB’000
Turnover	8,995	Nil	Nil
Loss before taxation	(4)	Nil	Nil
Loss after taxation	(4)	Nil	Nil
	As at	As at 31 December
	31 August 2010	2009	2008
	audited	audited	audited
	HK$’000	RMB’000	RMB’000
Total assets	18,541	7,139	3,055
Net assets	10,768	7,168	3,034

REASONS FOR THE ACQUISITION

The Company is an investment holding company and its subsidiaries are engaged in the (i) remanufacturing and sale of computer printing and imaging products; (ii) manufacture and sale of data media products; and (iii) distribution and sale of data media products.

As disclosed in the interim report of the Group for the six months ended 30 June 2010, the Group’s manufacturing businesses have been facing successive challenges due to strong competition, continued high production and raw materials costs. For the six months ended 30 June 2010, the Group recorded a net loss attributable to the owners of the Company of approximately HK$137.9 million. The Company has recently announced a profit warning announcement stating that the Group is expected to record a considerable increase in loss for the year ended 31 December 2010 as compared with the loss for the year ended 31 December 2009, details of which are set out in the announcement of the Company dated 17 January 2011. With a view to improving its financial performance, the Group has been actively looking for attractive merger and acquisition opportunities in order to extend its business reach.

As described in the paragraph headed “Information on the New Group” above, the New Group provides the opportunity for the Company to position itself in the global medical device industry. The medical device industry has high barriers to entry compared with other industries. Economic, regulatory and legal obstacles stand in the way of potential new competitors. The Target Companies were qualified vendors to supply components of the disposal lancet device for an engineering and manufacturing outsource service company in the United States. Accordingly, the New Group is equipped to become a medical device manufacturer for catering the increasing demand for diabetic care products. According to the statistics of International Diabetics Federation, the estimated global diabetic population will be increased from 246 million in 2010 to 380 million in 2025. Given the continuous growth in the diabetic population, it is expected that the business of the New Group will continue to expand and the Directors are optimistic about the long term future development of the medical device manufacturing business.

In light of the historical profitable performance and the prospects of medical device manufacturing business of the New Group, the Directors consider that the Acquisition provides a good opportunity for the Group to improve its income stream and turnaround its business. Therefore, the Directors (excluding Mr. Yip who has abstained from voting due to his interests in the Acquisition, and the independent non-executive Directors whose views are to be included in the circular to be issued by the Company to the Shareholders) are of the view that the terms of the Acquisition Agreement are negotiated on arm’s length basis, on normal commercial terms, fair and reasonable and that the Acquisition is in the interests of the Company and its Shareholders as a whole.

DETAILS OF THE PERFORMANCE INCENTIVE AGREEMENT

Parties:

The issuer: the Company

The principal: the Purchaser

The service provider: Service Provider

The Service Provider is a company to be incorporated in Hong Kong. It will be owned by Vendor 1 and Vendor 2 but the exact shareholding is yet to be determined as at the date of the Acquisition Agreement. It is expected that the Service Provider will be an associate of Vendor 2 and thus will be a connected person of the Company.

Term: the period commencing on the first Business Day after the Performance Incentive Agreement becoming unconditional and ending on 31 December 2015

Role of the Service Provider

The Performance Incentive Agreement is a conditional agreement pursuant to which, the Purchaser will engage the Service Provider to provide the Services to the Purchaser. The Services to be provided by the Service Provider will include principally:

(i) Assisting in the setting up of a suitable structure for the new medical devices business of the Titron Group;
(ii) Assisting in providing strategic advice concerning the positioning, and direction and implementation of, the medical devices business to the board and/or senior management of each of the members of the Titron Group;
(iii) Assisting in identifying sales and/or business opportunities to grow the medical devices business of the Titron Group;
(iv) Assisting in identifying appropriate key personnel to be hired by the Titron Group;

(v) Assisting in identifying suitable opportunities for mergers and acquisitions to grow the medical devices business of the Titron Group;
(vi) Reviewing and commenting on, and finalising in conjunction with the senior management of the Purchaser, the annual budget of the Titron Group prepared by the Purchaser;
(vii) Monitoring the financial performance of the Titron Group against the annual budget; and
(viii) Attending meetings of the Board to report on the business, finances and prospects of the medical devices business of the Titron Group if so required by the Board and at such times as the Board may reasonably require.

Conditions precedent

The Performance Incentive Agreement is conditional upon:

(i) the passing by the Independent Shareholders at the SGM of the necessary resolutions to approve the Performance Incentive Agreement and the transactions contemplated thereunder, including without limitation, the issue and allotment of the Performance Incentive Shares to the Service Provider (or its nominees) and the Caps as required by the Listing Rules;
(ii) the Listing Committee of the Stock Exchange granting listing of and permission to deal in the Performance Incentive Shares;
(iii) if applicable, the approval of the Bermuda Monetary Authority in respect of the allotment and issue of the Performance Incentive Shares; and
(iv) the Acquisition Agreement becoming unconditional in all respects, and Completion taking place, in accordance with its terms.

If any of the above conditions are not satisfied on or before 31 August 2011, or such later date as the parties may agree, the Performance Incentive Agreement shall cease and determine and no party shall have any obligation or liability thereunder except for any antecedent breaches of their obligations.

Termination

The Performance Incentive Agreement will terminate automatically on 31 December 2015 and the satisfaction of all parties’ obligations in relation to the Performance Bonus.

The Performance Incentive Agreement may be terminated by notice in writing in the event that:

(i) a party commits a material breach of the Performance Incentive Agreement and that party not making good such breach within sixty (60) days from the date a written notice is received from another party to remedy such breach;
(ii) a party becomes insolvent or goes into liquidation (other than a voluntary liquidation for the purposes of reconstruction or amalgamation upon terms previously approved in writing by the other parties) or a receiver or administrator being appointed or on the occurrence of events with similar effect; or
(iii) the Performance Incentive Agreement may be terminated by the Service Provider if there is a change of control in the Company or the Purchaser.

Fees:

Pursuant to the Performance Incentive Agreement, the fee shall be payable to the Service Provider for the Services rendered by it on the following basis.

(i) Service fee

The Service Provider will be paid a monthly fee of HK$200,000 in cash.

(ii) Performance Bonus

The Service Provider will also be entitled to receive Performance Bonus equal to 30% of excess of the pro forma combined profit before tax of the Titron Group over HK$10 million for each of the five financial years ending 31 December 2015. The Performance Bonus in each year shall be satisfied 50% in cash by the Purchaser and subject to the relevant cap amounts (the “Share Caps”) for each of the financial year ended 31 December 2011 to 31 December 2015, 50% in Performance Incentive Shares to be issued by the Company. If in any financial year, the Service Provider would be entitled to the Performance Incentive Shares in excess of the Share Caps, Performance Incentive Shares equivalent to the Share Caps shall be issued and allotted and the balance of Performance Bonus in excess of the Share Caps shall be payable in cash.

The Performance Incentive Shares

The Performance Incentive Shares shall be allotted and issued at HK$0.2 per Share (subject to the adjustments similar to those of the Convertible Notes) which is equal to the Conversion Price. The maximum amount and the equivalent number of Performance Incentive Shares to be issued under the Performance Incentive Agreement are as follows:

	2011	2012	2013	2014	2015
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Share Caps	1	5	30	70	100
	Number	Number	Number	Number	Number
	of Shares	of Shares	of Shares	of Shares	of Shares
	(million)	(million)	(million)	(million)	(million)
Equivalent maximum
number of Performance
Incentive Shares	5	25	150	350	500

A maximum of 1,030,000,000 Performance Incentive Shares represent approximately (i) 68.5% of the existing issued share capital of the Company; (ii) 40.7% of the issued share capital of the Company as enlarged by the allotment and issue of the Performance Incentive Shares; and (iii) 33.7% of the issued share capital of the Company as enlarged by the allotment and issue of the Performance Incentive Shares and the issue of the Conversion Shares upon full conversion of the Convertible Notes. The Performance Incentive Shares, when allotted and issued, shall be free from any lien, charge, option or encumbrance and credited as fully paid so as to rank pari passu in all respects with all other Shares as at the date of the allotment. Issue of the Performance Incentive Shares including the right to all dividends, distributions and other payments made or to be made, and right issue or bonus issue payable or to be taken up, the record date for which falls on or after the date of such allotment and issue. Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Performance Incentive Shares. The allotment and issue of the Performance Incentive Shares is subject to the approval by the Independent Shareholders at the SGM.

If there is a change of control of the Purchaser, the obligation of Company to issue and allot Performance Incentive Shares shall terminate and from such date the Purchaser shall or shall procure that the Titron Group shall pay the Performance Bonus in cash.

The Right of First Refusal

Pursuant to the Performance Incentive Agreement, neither Purchaser nor the Company shall sell, transfer, assign or otherwise dispose of the whole or any part of, or any interest in, the share capital or undertaking of any member of the Titron Group or a substantial part of the capital or assets or any undertaking or business of the Titron Group during the term without the consent of the Service Provider. In the event of any such proposed sale, the Service Provider shall have the right of first refusal or the Service Provider shall be entitled to receive in cash on the date of completion of such sale the higher of:

a. 10% of the consideration received from the third party (the “Third Party Consideration”); and
b. 30% of any amount of the Third Party Consideration in excess of the aggregate of the Consideration received by the Vendors pursuant to the Acquisition Agreement less any reasonable costs and expenses of the Vendors incurred in connection with the sale of the interests of the Titron Group pursuant to the Acquisition Agreement plus any reasonable costs and expenses incurred by the Group in connection with the sale of the Titron Group or its business interest to the third party.

Other terms:

(a) the directors of each of the members of the Target Companies will have sole responsibility for the day-to-day running and management of the operations of the Titron Group;
(b) the Service Provider shall be entitled to appoint 3 directors to the board of each member of the Titron Group;
(c) the Purchaser undertakes with the Service Provider that, save with the written consent of the Service Provider, it shall irrevocably waive all its rights to dividends and other distributions in respect of the shares in the Titron Group in excess of 40% of the distributable profits of the Titron Group for each financial year of the Titron Group; and
(d) the Service Provider shall provide such information in connection with the Services and the Titron Group as is reasonably required by the Purchaser for it to comply with all the requirements of the Listing Rules and all other applicable rules, codes and regulations in respect of auditing.

CAPS OF THE CONTINUING CONNECTED TRANSACTIONS

To comply with Rule 14A.35(2) of the Listing Rules, it is required to specify an annual cap in respect of the Service Fee and the Performance Bonus payable by the Group to the Service Provider under the Performance Incentive Agreement for each of the financial year ended 31 December 2011 to 31 December 2015, which is proposed as follows:

	2011	2012	2013	2014	2015
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Cap amounts on
the Service Fee	1.6	2.4	2.4	2.4	2.4
Cap amounts on
the Performance Bonus	2	53	130	300	350

The proposed Caps for the Service Fee are determined based on the fixed monthly service fee as stipulated in the Performance Incentive Agreement. The proposed Caps for the Performance Bonus are determined with reference to the anticipated expected sales of Titron Group’s products and cost structure of the Titron Group, the expansion of the scale of production and future growth of the Titron Group’s business in particular, the manufacturing business of the medical device for the five years ended 31 December 2015. The Directors consider the bases are fair and reasonable.

SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is a summary of the shareholding structure of the Company (i) as at the date of this announcement; (ii) immediately after the issue of 525,000,000 Conversion Shares upon full conversion of the Convertible Notes; and (iii) immediately after the issue of 525,000,000 Conversion Shares upon full conversion of the Convertible Notes and the issue of a maximum of 1,030,000,000 Performance Incentive Shares:

Mr. Xie Song Guang Mr. Chan Ping Che Mr. Leung Ka Kui, Johnny (Note 1) Vendors (or their respective nominees) (Note 2) Public	As at the date of this announcement Number of shares % (approx.) 140,000,000 9.31% 132,336,000 8.80% 290,000 0.02% 3,000,000 0.20% 1,228,124,505 81.67% 1,503,750,505 100.00%	Immediately after the issue of the Conversion Shares upon full conversion of the Convertible Notes Number of shares % (approx.) 140,000,000 6.90% 132,336,000 6.52% 290,000 0.01% 528,000,000 26.03% 1,228,124,505 60.54% 2,028,750,505 100.00%	Immediately after the issue of the Conversion Shares upon full conversion of the Convertible Notes and the issue of a maximum of 1,030,000,000 Performance Incentive Shares(Note 3) Number of shares % (approx.) 140,000,000 4.58% 132,336,000 4.33% 290,000 0.01% 1,558,000,000 50.93% 1,228,124,505 40.15% 3,058,750,505 100.00%	Immediately after the issue of the Conversion Shares upon full conversion of the Convertible Notes and the issue of a maximum of 1,030,000,000 Performance Incentive Shares(Note 3) Number of shares % (approx.) 140,000,000 4.58% 132,336,000 4.33% 290,000 0.01% 1,558,000,000 50.93% 1,228,124,505 40.15% 3,058,750,505 100.00%
				100.00%

Notes:

Mr. Leung Ka Kui, Johnny is an independent non-executive Director.
Set out below is the allocation of the Convertible Notes agreed by the Vendors:

Allocation of principal amount of the Convertible Notes HK$ Vendor 1 32,687,000 Vendor 2 37,571,000 Mr. Lee 2,571,000 Vendor 4 32,171,000 Vendors (or their respective nominees) 105,000,000	Shareholding as at the date of this announcement Number of shares % (approx) – – 3,000,000 0.20% – – – – 3,000,000 0.20%	Immediately after the issue of the Conversion Shares upon full conversion of Convertible Notes Number of shares % (approx) 163,435,000 8.06% 190,855,000 9.41% 12,855,000 0.63% 160,855,000 7.93% 528,000,000 26.03%

The shareholding structure is for illustrative purpose. The Vendors informed the Company that in the event that upon conversion of the Convertible Notes and/or the issue of the Performance Incentive Shares, the Vendors, together with the parties acting in concert with them, will be interested in an aggregate of 30% or more of the voting rights of the Company immediately following the issue of the relevant Conversion Shares and/or the issue of the Performance Incentive Shares, the Vendors will comply with the relevant rules under the Hong Kong Code on Takeovers and Mergers.

REASONS FOR THE PERFORMANCE INCENTIVE AGREEMENT

The Vendors and their management team have specialized knowledge and the technical expertise relating to the manufacture in the PRC, and sale into export markets, of high quality precision made medical devices. They also have in-depth understanding on the competitive landscape of the medical device industry and have the necessary business connections of medical device business. As described in the paragraph headed “Reasons for the Acquisition” above, the Titron Group will focus on its new medical device manufacturing business which is highly specialized. Upon Completion, the Directors are of the view that it would be beneficial to the Company to have the Vendors through the Service Provider to assist the Titron Group for development of medical device manufacturing business and to provide the Titron Group with strategic advice concerning the positioning, and direction and implementation of, the medical devices business. Accordingly, it is expected that the Company, the Purchaser and the Service Provider will enter into the Performance Incentive Agreement on or before 28 February 2011, pursuant to which the Service Provider will provide the Services for the Titron Group after Completion. The Directors believe, with the support of the professional and experienced team of the Service Provider, the medical device manufacturing business of the Titron Group will be well managed. The entering into of the Performance Incentive Agreement thereupon is essential for the Company to grow the medical device manufacturing business rapidly after Completion.

The Directors (excluding Mr. Yip who has abstained due to his interests in the Performance Incentive Agreement, and the independent non-executive Directors whose views are to be included in the circular to be issued by the Company to the Shareholders) consider that the terms of the Performance Incentive Agreement, including the bases of determining Service Fee and Performance Bonus, serve to align the interests of the Company and the Shareholders as a whole, and are negotiated on arm’s length basis, on normal commercial terms, fair and reasonable and that the Performance Incentive Agreement is in the interests of the Company and its Shareholders as a whole.

LISTING RULES IMPLICATION

The Acquisition constitutes a major transaction of the Company under Chapter 14 of the Listing Rules. Mr. Yip, the Chairman and Managing Director of the Company, held 3,000,000 Shares as at the date of the Acquisition Agreement. Thus, Mr. Yip is a connected person of the Company. He is one of the Vendors and will be one of the shareholders of the Service Provider. By virtue of Mr. Yip’s interests in the Acquisition and the Service Provider, the Acquisition also constitutes a connected transaction of the Company and the provision of the Services by the Service Provider to the Purchaser will constitute the continuing connected transactions for the Company under Chapter 14A of the Listing Rules upon Completion.

The Independent Board Committee comprising all independent non-executive Directors has been established to advise the Independent Shareholders in respect of the terms of the Acquisition Agreement and the Performance Incentive Agreement, the Caps and the transactions contemplated thereunder. The Independent Financial Adviser will be appointed to advise the Independent Board Committee and the Independent Shareholders in these regards. Since the term of the Performance Incentive Agreement is over 3 years, in accordance with Rule 14A.35(1) of the Listing Rules, the Independent Financial Adviser will explain why a longer period for the Performance Incentive Agreement is required and confirm that it is normal business practice for contracts of this type to be of such duration.

As the Caps will exceed the relevant percentage ratios as provided in Rule 14A.34 of the Listing Rules, the Continuing Connected Transactions and the Caps will be subject to requirements for reporting, announcement and approval by the Independent Shareholders at the SGM by way of poll under the Listing Rules.

SGM

(i) The Acquisition Agreement and the transactions contemplated thereunder including the issue of the Convertible Notes and the Conversion Shares; and (ii) the Performance Incentive Agreement and the transactions contemplated thereunder including the issue and allotment of Performance Incentive Shares and the Caps are subject to the approval of the Independent Shareholders by way of poll at the SGM. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Vendors and their respective associates shall abstain from voting in respect of the proposed ordinary resolutions at the SGM.

GENERAL

A circular containing, among other things, (i) further details on the Acquisition Agreement; (ii) further details on the Performance Incentive Agreement and the Caps; (iii) the advice of the Independent Financial Adviser in relation to the Acquisition, the Continuing Connected Transactions and the Caps; (iv) the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Acquisition, the Continuing Connected Transactions and the Caps; (v) the financial information of the Group; (vi) the financial information of the Target Companies; (vii) the unaudited pro forma financial information on the Enlarged Group; (viii) the notice of the SGM; and (ix) other information as required under the Listing Rules will be sent to the Shareholders on or before 31 May 2011 as additional time is required to prepare the financial information of the Target Companies and the unaudited pro forma financial information on the Enlarged Group.

SUSPENSION AND RESUMPTION OF TRADING

DEFINITIONS

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

“Acquisition” the proposed acquisition of the Sale Shares by the Purchaser pursuant to the Acquisition Agreement

“Acquisition Agreement” the conditional sale and purchase agreement dated 23 January 2011 and entered into among the Company, Purchaser and the Vendors in relation to the Acquisition

“associate(s)”

has the meaning ascribed to it under the Listing Rules

“Board”

“Board” the board of Directors “Business Day” a day (other than a Saturday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

“BVI”

the British Virgin Islands

“Caps”

the maximum annual caps in respect of the Service Fee and the Performance Bonus in respect of the Continuing Connected Transactions

“Company”

Guojin Resources Holdings Limited (stock code: 630), a company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the Stock Exchange

“Completion” completion of the Acquisition Agreement
“Completion Date”

the date of Completion

“connected person”
has the meaning ascribed to it under the Listing Rules

“Consideration” the total consideration of HK$120 million for the Acquisition (subject to adjustment)

“Continuing Connected the provision of the Services contemplated under the Transactions” Performance Incentive Agreement
“Conversion Price” HK$0.2 per Share (subject to anti-dilutive adjustments from the date of the Acquisition Agreement, including share consolidation and sub-division, bonus issue, right issue at discount etc,)
“Conversion Shares” up to 525,000,000 new Shares which may fall to be allotted and issued upon full conversion of the Convertible Notes at the Conversion Price

“Convertible Notes”

the secured convertible notes in the principal amount of HK$105 million (subject to adjustment) to be issued by the Company to the Vendors to satisfy part of the Consideration

“Director(s)”

the director(s) of the Company

“Dongguan De Yue” 東莞德越電子塑膠製品有限公司 (Dongguan De Yue Electronic and Plastic Products Company Limited[#] ), a wholly-foreign-owned enterprise in PRC

“DVD”

digital video disc

“Enlarged Group”

the Group as enlarged by the Target Companies upon Completion

“FDA”

the Food and Drug Administration of the United States

“Group”

the Company and its subsidiaries

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

“Independent Board Committee”

the independent committee of the Board, comprising Mr. Leung Ka Kui, Johnny, Mr. Chan Kam Kwan, Jason and Mr. Lau Man Tak, being all the independent non-executive Directors, established for the purpose of, among, other things, advising the Independent Shareholders in respect of (i) the Acquisition Agreement and the transactions contemplated thereunder including but not limited to the issue of the Convertible Notes and the Conversion Shares; and (ii) the Performance Incentive Agreement and the transactions contemplated thereunder including but not limited to the issue of the Performance Incentive Shares and the Caps

“Independent Financial Adviser”

the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the terms of the Acquisition Agreement and the Performance Incentive Agreement, and the Caps

“Independent Third independent third party(ies) who is/are independent of and Party(ies)” not connected with the Company and its connected persons “Independent Shareholders other than the Vendors and their respective Shareholders” associates who are required to abstain from voting at the SGM under the Listing Rules “Last Trading Day” 21 January 2011, being the last trading day for the Shares before the date of this announcement “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “Mr. Lee” Mr. Lee Siew Yuen, one of the shareholders of Vendor 3 and an Independent Third Party “New Group” the Target Companies, the Purchaser and any of their subsidiaries from time to time upon and after Completion “OEM” Original Equipment Manufacturer

“OEM”

“Performance Bonus” the performance bonus to which the Service Provider will be entitled in relation to the Services pursuant to the Performance Incentive Agreement “Performance Incentive the conditional agreement to be entered into among the Agreement” Company, the Titron Group and the Service Provider on or before 28 February 2011 in relation to the provision of the Services “Performance Incentive up to 1,030 million new Shares which may fall to be allotted Shares” and issued to the Vendors to satisfy part of the Performance Bonus “PRC” the People’s Republic of China, for the purpose of this announcement, excluding Hong Kong, Macau Special Administrative Region of the PRC and Taiwan

“Purchaser” Energy Best Investments Limited, a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of the Company, being the purchaser under the Acquisition Agreement to be used as the immediate holding company of the Target Companies upon Completion
“Sale Shares” the entire issued share capital/registered capital of the Target Companies
“Service Fee” the service fee of HK$200,000 per month to which the Service Provider will be paid in relation to the Services pursuant to the Performance Incentive Agreement
“Service Provider” a company to be incorporated and to be owned by the Vendors for the purpose of providing the Services pursuant to the Performance Incentive Agreement
“Services” services to be provided by the Service Provider to the Purchaser, details of which are set out in the paragraph headed “Details of the Performance Incentive Agreement” above
“SGM” a special general meeting of the Company to be convened and held for the Independent Shareholders to consider and, if thought fit, approve, among other matters, (i) the Acquisition Agreement together with the transactions contemplated thereunder; and (ii) the Performance Incentive Agreement together with the transactions contemplated thereunder and the Caps
“Share(s)” ordinary share(s) of HK$0.10 each in the share capital of the Company

“Share Charge” the share charge to be made by way of deed over all the issued shares of the Purchaser to be executed by the Company in favour of the Vendors as security for the Convertible Notes “Shareholder(s)” holder(s) of the Shares “Stock Exchange” The Stock Exchange of Hong Kong Limited “subsidiaries” has the meaning ascribed to it under the Listing Rules “Target Companies” collectively, Titron Industries (including its subsidiary, Yong Li), Titron International, Titron Manufacturing, Titron Precision and Dongguan De Yue “Titron Group” the subsidiaries of the Purchaser from time to time including the Target Companies after Completion “Titron Industries” Titron Industries Limited, a company incorporated in Hong Kong with limited liability “Titron International” Titron International Limited, a company incorporated in Hong Kong with limited liability “Titron Manufacturing” Titron Manufacturing Limited, a company incorporated in Hong Kong with limited liability “Titron Precision” Titron Precision Limited, a company incorporated in Hong Kong with limited liability “United States” the United States of America “Vendor 1” Mr. Lye Khay Fong “Vendor 2” or “Mr. Yip” Mr. Yip Wai Lun, Alvin, the Chairman and Managing Director of the Company

“Vendor 3”	Titron Group Holdings Limited, a company incorporated in
	the BVI with limited liability and owned as to approximately
	42.5% by Vendor 1, approximately 42.5% by Vendor 2 and
	approximately 15% by Mr. Lee
“Vendor 4”	Chelin International Limited, a company incorporated
	in Hong Kong with limited liability and owned by the
	Independent Third Party
“Vendors”	collectively, Vendor 1, Vendor 2, Vendor 3 and Vendor 4
“Yong Li”	永利企業管理咨詢（深圳）有限公司(Yong Li Enterprise
	Management Consultancy (Shenzhen) Company Limited#), a
	wholly-foreign-owned enterprise in the PRC
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“%”	per cent.
	By order of the Board
	Guojin Resources Holdings Limited
	Yip Wai Lun, Alvin
	Chairman and Managing Director

Hong Kong, 25 January 2011

For reference purpose only, the Chinese names of the PRC entities have been translated into English in this announcement. In the event of any discrepancies between the Chinese names and the English translation, the Chinese names prevail.

As at the date of this announcement, Mr. Yip Wai Lun, Alvin, Mr. Ma Bo Ping, Mr. Zhou Yu Sheng, Ms. Lam Suk Ling, Shirley and Mr. Lee Cheuk Yin, Dannis are the executive Directors and Mr. Leung Ka Kui, Johnny, Mr. Chan Kam Kwan, Jason and Mr. Lau Man Tak are the independent non-executive Directors.

AI assistant

ICO Group Limited — Capital/Financing Update 2011

49938_rns_2011-01-25_74b0d1aa-8502-4d76-882b-9789187c2d93.pdf

THE ACQUISITION AGREEMENT

THE PERFORMANCE INCENTIVE AGREEMENT

SGM

GENERAL

SUSPENSION AND RESUMPTION OF TRADING

THE ACQUISITION AGREEMENT

Parties:

Assets to be acquired:

Consideration

Terms of the Convertible Notes

Conversion Price

Profit guarantee and obligations in relation to the Convertible Notes

Conditions Precedent

Completion

SHAREHOLDING STRUCTURE OF THE TARGET COMPANIES

INFORMATION ON THE NEW GROUP

Target Companies and the Purchaser

OEM Manufacturing Business

Medical Device Manufacturing Business

REASONS FOR THE ACQUISITION

DETAILS OF THE PERFORMANCE INCENTIVE AGREEMENT

Parties:

Role of the Service Provider

Conditions precedent

Termination

Fees:

(i) Service fee

(ii) Performance Bonus

The Performance Incentive Shares

The Right of First Refusal

Other terms:

CAPS OF THE CONTINUING CONNECTED TRANSACTIONS

SHAREHOLDING STRUCTURE OF THE COMPANY

REASONS FOR THE PERFORMANCE INCENTIVE AGREEMENT

LISTING RULES IMPLICATION

SGM

GENERAL

SUSPENSION AND RESUMPTION OF TRADING

DEFINITIONS

“associate(s)”

For reference purpose only, the Chinese names of the PRC entities have been translated into English in this announcement. In the event of any discrepancies between the Chinese names and the English translation, the Chinese names prevail.

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ICO Group Limited Capital/Financing Update 2011