Kingwell Group Limited — M&A Activity 2001

Aug 20, 2001

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 of any part of the contents of this announcement.

FT HOLDINGS INTERNATIONAL LIMITED

(Incorporated in Bermuda with limited liability)

CONNECTED TRANSACTION

The board of directors of the Company announces that the Group has entered into the following transaction on 17th August, 2001:*

The Acquisition

FT Strategic, a wholly owned subsidiary of the Company, has entered into an Agreement for Sale and Purchase of Shares with the Vendors for the purchase of (i) 43.92% of the issued share capital of FT Communications, (ii) 49% of the issued share capital of Billion Wealth and (iii) shareholder's loan in the amount of HK$1,500,000 advanced by one of the Vendors, Bestbuy to Billion Wealth, for the total price of HK$1,500,002 (comprising HK$1.00 being consideration for the FT Communications Shares, HK$1.00 being consideration for the Billion Wealth Shares and HK$1,500,000 being consideration for the Shareholder's Loan).

Prior to the Acquisition, both FT Communications and Billion Wealth were non-wholly owned subsidiaries of the Group. The Group was interested in 56.08% of the issued share capital of FT Communications, and FT Communications was interested in 51% of the issued share capital of Billion Wealth. After Completion, both FT Communications and Billion Wealth have become wholly owned subsidiaries of the Group.

Reasons for the Acquisition

The Vendors have requested the Group to purchase the said shares in FT Communications and Billion Wealth and the Shareholder's Loan. The Group intends to proceed with the Project and the Directors take the view that the considerations for the FT Communications Shares, the Billion Wealth Shares and the Shareholder's Loan are fair and reasonable.

The Directors also take the view that the Project will diversify the Group's business and also serves to strengthen the future income growth of the Group.

THE ACQUISITION

Sale and Purchase Agreement

Date: 17th August, 2001

Parties: (1) FT Strategic

(2) the Vendors

By the Agreement, FT Strategic agreed to purchase from the Vendors (i) 4,392 shares of US$1.00 each in the share capital of FT Communications, representing 43.92% of the entire issued share capital of FT Communications, for the price of HK$1.00, (ii) 980 shares of US$1.00 each in the share capital of Billion Wealth, representing 49% of the entire issued share capital of Billion Wealth, for the price of HK$1.00 and (iii) the benefit of the Shareholder's Loan for the price of HK$1,500,000.

Consideration

The considerations of HK$1.00 each for the purchase of the FT Communications Shares and the Billion Wealth Shares are nominal considerations only, as the Vendors intend to recoup the Shareholder's Loan.

The total purchase price of HK$1,500,002 has been paid upon completion of the Acquisition on 17th August, 2001.

Completion

Completion has taken place on 17th August, 2001 simultaneously with the signing of the Agreement.

Information on the Vendor

Prior to the Acquisition, Wong was interested in 43.92% of the share capital of FT Communications and FT Strategic was interested in the remaining 56.08% of the share capital of FT Communications.

Prior to the Acquisition, Bestbuy, a company wholly owned by Wong, was interested in 49% of the share capital of Billion Wealth and FT Communications was interested in the remaining 51% of the share capital of Billion Wealth.

Therefore, prior to the Acquisition, both Wong and Bestbuy were substantial shareholders of subsidiaries of the Company and they thus fall within the meaning of connected persons under the Listing Rules.

Information on FT Communications and Billion Wealth

FT Communications is an investment holding company and has not made or incurred any profit or loss save for initial incorporation expenses and interest expenses accrued on loans from holdings companies at commercial rate.

Billion Wealth is holding 93.4% of the total issued shares of Trendex. Trendex and Shenzhen Yong Hua Electronic System Company Limited, a company incorporated in PRC, have established a sino-foreign equity joint venture company in Shenzhen, PRC under the name of Guangdong Yong Hua New Electronic Network Investment Co. Ltd. for the development of a car alarm surveillance network system in the PRC. The system is based on the emission of radio signals from subscriber's cars which will be picked up by the receptor network installed by the PRC JV Co. Shenzhen Yong Hua Electronic System Company Limited does not hold any interest in the Company or its subsidiaries.

Shenzhen Yong Hua Electronic System Company Limited and its beneficial owners are independent third parties not connected with the Company or any director, chief executive or substantial shareholder of the Company or any of its subsidiaries or associates.

The PRC JV Co. has recently completed the installation of the surveillance network system in Xian and launched its service. The PRC JV Co. is in the course of installing the surveillance network system in Guangzhou.

The PRC JV Co. is still in the development stage and has not yet generated any income. It has incurred an unaudited operating loss of HK$1,321,784 since its formation on 28th January, 2000 to 31st December, 2000. As at 31st December, 2000, it has a net asset of approximately HK$6,549,000.

REASONS FOR THE ACQUISITION

The Vendors have requested the Group to purchase the said shares in FT Communications and Billion Wealth and the Shareholder's Loan. The Group intends to proceed with the Project and the Directors take the view that the considerations for the FT Communications Shares, the Billion Wealth Shares and the Shareholder's Loan are fair and reasonable.

The Directors also take the view that the Project will diversify the Group's business and also serves to strengthen the future income growth of the Group.

GENERAL

Under the Listing Rules, the Acquisition constitutes a connected transaction of the Company.

DEFINITIONS

"Acquisition" the purchase by FT Strategic of the FT Communications Shares, the Billion Wealth Shares and the Shareholder's Loan

"Agreement" agreement for sale and purchase of shares dated 17th August, 2001 and made between the Vendors and FT Strategic whereby FT Strategic agreed to purchase from the Vendors the FT Communications Shares, the Billion Wealth Shares and the Shareholder's Loan

"Bestbuy" Bestbuy Group Company Limited, a company incorporated in the British Virgin Islands

"Billion Wealth" Billion Wealth Investment Limited, a company incorporated in the British Virgin Islands and a subsidiary of the Company

"Billion Wealth Shares" 980 shares of US$1.00 each in the capital of Billion Wealth, representing 49% of the entire issued share capital of Billion Wealth;

"Company" FT Holdings International Limited, the shares of which are listed on the Stock Exchange

"Completion" completion of the Acquisition

"Directors" the directors of the Company

"FT Communications" FT Communications Limited, a company incorporated in the British Virgin Islands and a subsidiary of the Company

"FT Strategic" FT Strategic Investments Limited, a wholly owned subsidiary of the Company

"Group" the Company and its subsidiaries

"Hong Kong" the Hong Kong Special Administrative Region of the People's Republic of China

"HK$" Hong Kong Dollars, the lawful currency of Hong Kong

"Listing Rules" the Rules Governing the Listing of Securities on the Stock Exchange

"PRC" the People's Republic of China

"PRC JV Co." the sino-foreign equity joint venture company in Shenzhen, PRC under the name of Guangdong Yong Hua New Electronic Network Investment Co., Ltd. (廣東永華新電子網絡發展有限公司) established by Trendex and Shenzhen Yong Hua Electronic System Company Limited (堔圳市永華電子系統股份有限公司)

"Project" the business of developing a car alarm system in the PRC by the PRC JV Co.

"Shareholder's Loan" loan in the total amount of HK$1,500,000 advanced by Bestbuy to Billion Wealth

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"Trendex" Trendex Technology Limited, a company incorporated in Hong Kong

"Vendors" Wong and Bestbuy

"Wong" Miss Wong Miu Yee Sally, vendor of the FT Communications Shares

By Order of the Board

FT Holdings International Limited

Lai Kam Wing, Jimmy

Managing Director

Hong Kong, 17th August, 2001

Please also refer to the published version of this announcement in the i-Mail.