KPa-BM Holdings Limited — Proxy Solicitation & Information Statement 2002

Oct 15, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China Resources Logic Limited, you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or the transfer was effected for transmission to the purchaser or transferee.

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

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(Incorporated in Bermuda with limited liability)

DISCLOSEABLE TRANSACTION

in respect of the Acquisition of the entire equity interest in Wuxi Huajing Electronics Co., Ltd.

• for identification purpose only

15th October, 2002

CONTENTS

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
2.	Acquisition Agreement dated 29th September, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
3.	Information on Huajing Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
4.	Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
5.	General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix	— General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13

— i —

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meaning:

• ‘‘Acquisition’’ the transaction contemplated under the Acquisition Agreement ‘‘Acquisition Agreement’’ the conditional sale and purchase agreement dated 29th September, 2002, entered into between Wuxi CR Microelectronics as the purchaser and the Vendors in relation to the entire equity interest in Huajing

• ‘‘Board’’ the board of Directors ‘‘Cinda’’ (China Cinda Asset Management Corporation), a state-owned non-banking financial institution of the PRC, one of the Key Creditors of Huajing and not a connected person to the Company pursuant to the Listing Rules

• ‘‘Company’’ or ‘‘CR Logic’’ China Resources Logic Limited ( ), an exempted company incorporated in Bermuda with limited liability, the shares of which are listed on the main board of the Stock Exchange

• ‘‘Completion’’ completion of the Acquisition, which is subject to, among others, the conditions as set out in the paragraph headed ‘‘Conditions’’ being fulfilled and/or waived (if applicable) by the Purchaser

• ‘‘Consideration’’ RMB20,000,000 (about HK$18.9 million), the total consideration payable pursuant to the Acquisition Agreement

• ‘‘CRH’’ China Resources (Holdings) Company Limited, a company with limited liability established in Hong Kong and the controlling shareholder of the Company

• ‘‘Debt Restructuring’’ the debt restructuring of Huajing Group ‘‘Debt Restructuring the debt restructuring agreement dated 11th September, 2002, entered into Agreement’’ between Huajing and Cinda

• ‘‘Directors’’ the directors of the Company ‘‘GAAP’’ Generally accepted accounting principles ‘‘Group’’ the Company together with its subsidiaries ‘‘Guarantee Agreement’’ the guarantee agreement dated 11th September, 2002, entered into between CRH and Cinda

• ‘‘Guarantee Arrangement’’ the arrangement under the Guarantee Agreement, details of which were set out in the paragraph headed ‘‘Debt restructuring’’

• ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC

— 1 —

DEFINITIONS

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||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|‘‘Huajing’’|(Wuxi|Huajing|Electronics|Co.,|Ltd.)|(formerly|
|known|as|(China|Huajing|Electronics|Group|
|Corporation)),|a|company|(a)|with|limited|liability|incorporated|in|Wuxi,|
|Jiangsu,|the|PRC|in|September|2002|pursuant|to|the|conversion|of|China|
|Huajing Electronics Group Corporation and (b) with a registered and paid-up|
|capital|of|RMB20,000,000|(about|HK$18.9|million),|and,|after|Completion,|
|will|become|a|wholly-owned|subsidiary|of|the|Company|
|‘‘Huajing|Group’’|Huajing|and|its|subsidiaries|
|‘‘IC’’|integrated|circuit|
|‘‘Key|Creditors’’|the|two|key|creditors|of|Huajing,|namely|(a)|Cinda,|a|state-owned|non-|
|banking|financial|institution|of|the|PRC|and|(b)|the|PRC|Central|
|Government|
|‘‘Latest|Practicable|Date’’|9th|October,|2002,|being|the|latest|practicable|date|before|the|printing|of|
|this|circular|for|ascertaining|certain|information|contained|herein|
|‘‘Listing|Rules’’|The|Rules|Governing|the|Listing|of|Securities|on|the|Stock|Exchange|
|‘‘MOS’’|Metal|Oxide|Semiconductor,|the|three|materials|used|to|form|a|gate|in|the|
|most|common|kind|of|field|effect|transistor|
|‘‘PRC’’|People’s|Republic|of China,|for|the purpose|of this|circular,|excluding|Hong|
|Kong,|The|Macau|Special|Administrative|Region|and|Taiwan|
|‘‘PRC|Central|Government’’|The|central|government|of|the|PRC|
|‘‘PRC|Valuer’’|(Jiangsu|Gongzheng|Certified|Public|
|Accountants|Co.,|Ltd.),|a|firm|of|independent|valuers|licensed|by|the|
|Ministry|of|Finance|to|carry|out|valuation|of|state-owned|assets|in|the|PRC|
|‘‘Project|908’’|One|of|the|key|projects|in|the|PRC|8th|five-year|(from|1991|to|1995)|plan|
|initiated|by|the|PRC|Central|Government|
|‘‘Purchaser’’|or|‘‘Wuxi|CR|Wuxi|China|Resources|Microelectronics|(Holdings)|Limited,|a|wholly-|
|Microelectronics’’|owned|subsidiary|of|the|Company|incorporated|in|the|British|Virgin|Islands|
|and|the|purchaser|under|the|Acquisition|Agreement|
|‘‘RMB’’|Renminbi,|the|lawful|currency|of|the|PRC|
|‘‘SDI|Ordinance’’|Securities|(Disclosure|of|Interests)|Ordinance,|Chapter|396|of|the|Laws|of|
|Hong|Kong,|as|amended|and|supplemented|or|otherwise|modified|from|time|
|to|time|
|‘‘Semico’’|Wuxi|China|Resources|Semico|Company|Limited|
|(|),|a|fabless|IC|design|house|and|a|wholly-|
|owned|subsidiary|of|the|Company|
|‘‘Shareholder(s)|holder(s)|of|the|shares|of|the|Company|

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DEFINITIONS

• ‘‘Stock Exchange’’

The Stock Exchange of Hong Kong Limited

• ‘‘Vendors’’

• Wuxi Municipal State Asset Administration Committee and Wuxi Guolian, who (a) are not connected persons to the Company pursuant to the Listing Rules and (b) are the vendors pursuant to the Acquisition Agreement

• ‘‘Wuxi Guolian’’

• (Wuxi Guolian Development (Group) Co.,

• Ltd.), (a) a state-owned enterprise incorporated in Wuxi, Jiangsu, the PRC and (b) whose ultimate shareholder is Wuxi Municipal Government

• ‘‘Wuxi Municipal the People’s Government of Wuxi Municipality of the PRC Government’’

• ‘‘Wuxi Municipal State , a department of Wuxi Municipal Government Asset Administration responsible for the administration of state-owned asset Committee’’

• ‘‘%’’ per cent.

Note: For information purpose only, the translation of RMB to HK$ in this circular is based on the exchange rate of RMB106: HK$100.

— 3 —

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

Board of Directors: SONG Lin (Chairman) CHEN Lang (Deputy Chairman and Chief Executive Officer) ONG Thiam Kin (Executive Director and Chief Financial Officer) ZHU Jinkun DAI Zhenhua YU Min YU Yu NING Gaoning KO Ping Keung WONG Tak Shing LUK Chi Cheong

Registered office: Cedar House 41 Cedar Avenue Hamilton HM 12 Bermuda

Head office and principal place of business: Room 4001 China Resources Building 26 Harbour Road Wanchai Hong Kong

• Non-executive Director

• ** Independent non-executive Director

15th October, 2002

To the Shareholders and, for information only, holders of share options of the Company

DISCLOSEABLE TRANSACTION

1. INTRODUCTION

The Company announced on 29th September, 2002 that it has, through one of its wholly-owned subsidiaries, entered into the Acquisition Agreement with the Vendors, pursuant to which the Company will acquire the entire equity interest in Huajing for a cash consideration of RMB20,000,000 (about HK$18.9 million).

For the purpose of the Listing Rules, the Acquisition constitutes a discloseable transaction for the Company.

The main purpose of this circular is to provide you with further information relating to the Acquisition.

• for identification purpose only

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LETTER FROM THE BOARD

2. ACQUISITION AGREEMENT DATED 29TH SEPTEMBER, 2002

Parties

Purchaser: Wuxi CR Microelectronics, a wholly-owned subsidiary of the Company Vendors: Wuxi Municipal State Asset Administration Committee and Wuxi Guolian

Assets to be acquired

The entire equity interest in Huajing.

Set out below are the simplified shareholding structures of the Company and Huajing as at the Latest Practicable Date and after Completion:

As at the Latest Practicable Date

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Wuxi Municipal State Asset
CRH Wuxi Guolian
Administration Committee
Guarantee
74.16% Arrangement 95.00% 5.00%
CR Logic Huajing
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Immediately after Completion

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CRH
74.16%
CR Logic
100.00% Guarantee Arrangement
Wuxi CR Microelectronics
100.00%
Huajing
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Consideration

RMB20,000,000 (about HK$18.9 million), which will be satisfied by cash from the Group’s internal resources upon Completion.

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LETTER FROM THE BOARD

Set out below is a summary of different pricing benchmarks in connection with the Acquisition:

Benchmark Unaudited pro forma net assets value of Huajing Group as at 31st July, 2002 (note 2) Adjustments under an independent valuation (note 3): — Writedown to fixed assets — Others An independent valuation of the net assets of Huajing as at 31st July, 2002 (note 3) Adjustment under the Debt Restructuring Agreement (note 4) Independent valuation of the net assets of Huajing as at 31st July, 2002 (note 3) as adjusted for the Debt Restructuring Agreement

Value (RMB million) Pricing basis (note 1) 466 A discount of 96% (277) (5) 184 A discount of 89% 324 508 A discount of 96%

Notes:

1. Being the pricing basis of the Acquisition, which is computed using the following formula: 1 – [(Consideration)/ (the value of the benchmark)].

2. After taking into account a waiver of about RMB538 million (about HK$508 million) from the State Development Planning Commission and the Ministry of Finance of the PRC in respect of an outstanding borrowing and accrued interest effectively due to the PRC Central Government.

3. The valuation of the net assets value of Huajing as at 31st July, 2002 was prepared by the independent PRC Valuer and is subject to the approvals by the relevant regulatory authorities in the PRC.

4. Being the aggregate amount of loans and accrued interest payable by Huajing Group to be waived under the Debt Restructuring Agreement (an agreement entered into after 31st July, 2002 (the record date in connection with the independent valuation)), thereby increasing the net assets value of Huajing Group.

The determination of the consideration was a result of arm’s length negotiations between the Company and the Vendors. The Directors believe that the strong support from CRH (i.e., the Company’s controlling shareholder) and the extensive experience of the Group in the semiconductor industry enabled the Company to have obtained such a significant discount.

Conditions

The Acquisition Agreement is conditional upon, among other things, the following conditions being fulfilled on or before 20th December, 2002 or such other date as the Purchaser may otherwise agree:

• (1) satisfactory results of the due diligence review on Huajing Group (covering without limitation to their legal issues, financial position and operations) to the Purchaser;

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LETTER FROM THE BOARD

• (2) the obtaining of all the approvals which are required by the relevant laws and regulations in the PRC or otherwise necessary for the Completion;

• (3) the receipt by the Purchaser of a legal opinion issued by a firm of qualified lawyers in the PRC in such form and substance satisfactory to the Purchaser in respect of the Acquisition; and

• (4) that the Debt Restructuring Agreement has not been amended and is still legally valid.

3. INFORMATION ON HUAJING GROUP

History and operation

Huajing is one of the first movers to have an established brandname in the PRC semiconductor industry. It was established as a state-owned enterprise in Wuxi, Jiangsu, the PRC in August 1989 under the name of China Huajing Electronics Group Corporation and was designated in 1990 by the PRC Central Government to carry out the ‘‘Project 908’’ — one of the key projects initiated by the PRC Central Government for the purpose of establishing a PRC enterprise with an important presence in the semiconductor industry. In September 2002, China Huajing Electronics Group Corporation completed its conversion from a state-owned enterprise to Huajing, a company with limited liability wholly owned by the Vendors. Huajing Group is one of the largest enterprises in the PRC semiconductor industry in terms of its sales of bipolar ICs and discrete devices. Huajing Group is engaged in a full range of semiconductor businesses from IC design, fabrication to testing and packaging.

Set out below is a summary of the key production lines of Huajing Group:

	Approximate
	annual production
Nature of production line	capacity (slices)	Technology
6’’ wafer	116,000	MOS 0.8–1 mm
5’’ wafer	69,000	bipolar 1–2 mm
4’’ wafer	163,000	bipolar 2–3 mm
4’’ wafer	406,000	bipolar device 3 mm
3’’ wafer	105,000	bipolar device 5 mm

Huajing Group has a team of experienced engineers and technicians with in-depth knowledge and expertise in the semiconductor industry.

In 2001, more than 75% of the revenue was derived from the manufacture and sale of bipolar ICs, MOS 5’’ and 6’’ ICs and discrete devices. The ICs manufactured by Huajing Group are mainly used in consumer electronic products such as television, hi-fi, remote control, etc.. Huajing Group has established an extensive distribution network to cover most parts of the PRC with a strong client base including some PRC leading electronics companies. More than 85% of Huajing Group’s products are sold domestically in the PRC.

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LETTER FROM THE BOARD

The table below is a summary of the unaudited pro forma results of Huajing Group for the two years ended 31st December, 2001 and the seven months ended 31st July, 2002 prepared in accordance with the PRC GAAP:

	Seven months
	ended
	31st July,	Year ended 31st December,
	2002	2001	2000
	(RMB’000)	(RMB’000)	(RMB’000)
Turnover	410,098	837,635	765,683
Loss before tax and minority interest	44,781	109,696	174,976
Loss after tax and before minority
interest	53,940	126,891	188,542
Net loss (note)	57,079	133,457	194,547
Memo items:
Interest expenses	37,148	68,118	68,164
Depreciation expenses	87,983	212,167	186,442

• Note: Should Huajing Group’s operating results be adjusted for the savings in (a) deprecation charge as a result of a writedown to fixed assets of about RMB277 million (about HK$261 million) under the valuation prepared by the PRC Valuer (after taking into account the depreciation policy adopted by the Group (which is based on a shorter useful lives for fixed assets compared with the one currently adopted by Huajing Group)) and (b) interest expense as a result of the waiver of about RMB862 million (about HK$813 million) loans and accrued interest from the Key Creditors pursuant to the debt restructuring exercise, its net loss for the seven months ended 31st July, 2002 would be reduced by RMB42 million (about HK$40 million) to become RMB15 million (about HK$14 million).

Further improvement in the profitability of Huajing Group is expected after Completion:

• (1) Huajing Group will improve its financial structure after the reduction of an aggregate of RMB862 million (about HK$813 million) loans and accrued interests as agreed with the Key Creditors and thereby an interest saving (details of which are set out in the paragraph headed ‘‘Debt restructuring’’).

• (2) Huajing Group’s fixed assets were written down by RMB277 million (about HK$261 million) pursuant to the independent valuation dated 31st July, 2002 and thereby the savings in depreciation charge.

• (3) After being transformed from a state-owned enterprise to a wholly-owned subsidiary of a listed company in Hong Kong, Huajing Group will further strengthen its management and improve its operating efficiency. The Group will:

• . further streamline the operation of Huajing Group

• . inject financial, management and technical expertise into Huajing Group

• . introduce foreign technical and/or strategic partners to Huajing Group.

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LETTER FROM THE BOARD

Debt restructuring

As a result of its capital intensive investments in production facilities, Huajing Group has been in a heavy indebtedness position. In April 2002, Huajing obtained a waiver of the aggregate amount of about RMB538 million (about HK$508 million) from the State Development Planning Commission and the Ministry of Finance of the PRC in respect of an outstanding borrowing and accrued interest effectively due to the PRC Central Government. Huajing is in the process of completing the relevant regulatory procedures.

At the close of business on 31st July, 2002, Huajing Group had outstanding borrowings and accrued interest of about RMB1,273 million (about HK$1,201 million), of which about RMB941 million (about HK$888 million) was subject to a debt restructuring exercise which (a) has been agreed with one of the Key Creditors (namely Cinda) in respect of RMB893 million (about HK$843 million) and (b) has been in the process of negotiation with a creditor independent of the Company in respect of RMB48 million (about HK$45 million).

Pursuant to the Debt Restructuring Agreement dated 11th September, 2002, Cinda and Huajing agreed to reduce the outstanding amount by about RMB324 million (about HK$306 million) to about RMB569 million (about HK$537 million) which will be interest-free and will be repaid according to the following schedule:

• (1) RMB30 million (about HK$28 million) by 25th September, 2002 as the first installment which was settled by Huajing before the agreed schedule;

• (2) RMB179 million (about HK$169 million) on or before 20th December, 2002 as the second installment; and

• (3) the remaining RMB360 million (about HK$340 million) by six equal installments (i.e., each installment of RMB60 million (about HK$57 million) by each of 30th June and 20th December over a period from 2003 to 2005.

To demonstrate its support to the Company to proceed with a growth strategy in the semiconductor industry, CRH entered into the Guarantee Agreement on 11th September, 2002 to guarantee the repayment of Huajing under the Debt Restructuring Agreement. Neither the Company nor Huajing Group has to make any payment or give any security/indemnity to CRH in connection with the Guarantee Arrangement.

The Key Creditors have agreed to waive an aggregate of about RMB862 million (about HK$813 million) loans and accrued interest. Huajing Group is expected to be in a better position in terms of its capital structure and financing cost.

The net assets value of Huajing Group as at 31st July, 2002 of about RMB466 million (about HK$440 million) has taken into account the waiver of about RMB538 million (about HK$508 million) granted by one of the Key Creditors in April 2002 in respect of an outstanding borrowing and accrued interest. As adjusted for (a) the aggregate reduction in debt and accrued interest of about RMB324 million (about HK$306 million) pursuant to the Debt Restructuring Agreement, (b) the writedown of fixed assets of about RMB277 million (about HK$261 million), and (c) other writedown of about RMB5 million (about HK$4.72 million), the unaudited pro forma net assets value of Huajing Group as at 31st July, 2002 would be adjusted from RMB466 million (about HK$440 million) to become about RMB508 million (about HK$479 million), which comprises (a) total assets of about RMB1,803

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LETTER FROM THE BOARD

million (about HK$1,701 million), (b) the aggregate of total loans and accrued interest amounting to about RMB949 million (about HK$895 million) and (c) other liabilities of about RMB346 million (about HK$326 million).

As at 30th June, 2002, the Group had a net cash balance of about HK$300 million. After Completion, the Group plans to inject fresh capital amounting to about RMB500 million (about HK$472 million) to strengthen the capital base of Huajing Group gradually by phases from the Group’s internal resources and bank borrowings. The planned capital injection is not a condition to completion of the Acquisition or the Debt Restructuring. The Directors believe that the Acquisition and the subsequent capital injection will not have immediate material adverse impact on the Group’s financial standing.

The Group will fully comply with the relevant provisions of the Listing Rules in connection with any acquisition that the Group may make in the future.

4. REASONS FOR THE ACQUISITION

The Group is principally engaged in the (a) manufacture of air-conditioner compressors in the PRC; (b) production of semiconductors in the PRC and Hong Kong; (c) provision of information technology services in the PRC and Hong Kong; and (d) manufacture and supply of office furniture in the PRC. The Group aims to become a market leader in the PRC’s low to mid end semiconductor market segment. At present, the principal assets of the Group’s semiconductor business include, among others, (a) production facilities for design, fabrication, packaging and testing of 4-inch wafers for consumer ICs used in clocks, toys and telecommunication products whose annual production capacity is about 360,000 slices of 4-inch wafers, (b) the entire equity interest in Semico, one of the largest fabless IC design houses in the PRC.

The Directors believe that the Acquisition represents an excellent investment opportunity to provide the Group with a platform to become a leading semiconductor manufacturer in the PRC in light of the following factors:

• (1) The prevailing domestic supply of ICs in the PRC could not satisfy the total market demand and an increasing number of world class electronics companies has been moving their production bases to the PRC. The Directors expect that the growth potential of the semiconductor industry in the PRC, especially for semiconductor products used in consumer electronics appliances and telecommunication devices, will remain robust in the foreseeable future.

• (2) The prevailing market environment of the semiconductor business provides the Company with attractive acquisition opportunities of valuable assets at a competitive valuation. Instead of paying a high price, the Company can use the cash saved to further expand and upgrade the production technologies and machinery when the semiconductor industry picks up.

• (3) Huajing Group is one of the largest producers in the PRC semiconductor market in terms of its sales of bipolar ICs and discrete devices. Huajing Group:

• . enjoys a good reputation in the industry. Its prevailing business covers the core semiconductor production processes from single crystal silicon manufacturing to packaging;

• . is especially strong in consumer semiconductor products;

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LETTER FROM THE BOARD

• . has a strong sales network and a very solid client base with more than 2,000 domestic clients;

• . has a strong R&D team comprising 60 experienced engineers and technicians and two design centres;

• . will benefit financially from

the debt restructuring arrangements whereby the Key Creditors agreed to waive an aggregate amount of about RMB862 million (about HK$813 million) in respect of the outstanding borrowings and accrued interest, and interest expenses thereon

the writedown of the fixed assets by about RMB277 million (about HK$261 million) under the valuation prepared by the PRC Valuer (after taking into account the depreciation policy adopted by the Group (which is based on a shorter useful lives for fixed assets compared with the one currently adopted by Huajing Group)), thereby resulting in a reduction of depreciation charge.

As a result, Huajing Group will become more competitive in terms of its financial structure; and

• . will benefit from an improved operation as a result of injection of financial and management expertise from the Group after Completion, which the Directors expect will facilitate the financial turnaround of Huajing Group shortly.

• (4) The Acquisition is in line with the Company’s growth strategy to become a market leader in the PRC semiconductor industry and will provide a platform for the Company to expand its semiconductor business into PRC’s low to mid end consumer ICs and devices market.

• (5) The Company’s controlling shareholder, CRH, has extended full support to the Company’s future development including the pursuit of the growth strategy in the semiconductor industry by, among others, providing a guarantee to the repayment of Huajing under the Guarantee Agreement. Neither the Company nor Huajing Group has to make any payment or give any security/indemnity to CRH in connection with the Guarantee Arrangement.

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LETTER FROM THE BOARD

5. GENERAL

The Directors (including the independent non-executive Directors) consider that the terms of the Acquisition Agreement are fair and reasonable and in the interests of the Group as far as the Shareholders are concerned.

For the purpose of the Listing Rules, the Acquisition constitutes a discloseable transaction for the Company.

Your attention is drawn to the additional information set out in the appendix to this circular.

As the Acquisition may or may not proceed (depending on the fulfillment of the conditions of the Acquisition Agreement), Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

Yours faithfully On behalf of the Board China Resources Logic Limited Chen Lang

Deputy Chairman and Chief Executive Officer

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of providing information with regard to the Group.

The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts not contained in this circular the omission of which would make any statement contained herein misleading.

2. DISCLOSURE OF INTERESTS

(a) Interest in the Company

As at the Latest Practicable Date, the interests of the Directors in the shares of the Company as recorded in the register maintained by the Company pursuant to Section 29 of the SDI Ordinance were as follows:

	Number of
	shares held
	Personal	Family
Name of Director	Interest	Interest
Mr. Zhu Jinkun	300,000	160,000
Mr. Yu Yu	—	60,000

Interest in options of the Company

As at the Latest Practicable Date, the following Directors had personal interests within the meaning of the SDI Ordinance in respect of options granted under the existing share option schemes of the Company as follows:

	Number of options
Name of Director	shares held
Mr. Song Lin	9,500,000
Mr. Chen Lang	7,500,000
Mr. Ong Thiam Kin	4,000,000
Mr. Zhu Jinkun	3,800,000
Mr. Dai Zhenhua	4,000,000
Mr. Yu Min	1,500,000
Mr. Yu Yu	2,500,000
Mr. Ning Gaoning	3,000,000
Mr. Ko Ping Keung	500,000
Mr. Wong Tak Shing	500,000
Mr. Luk Chi Cheong	500,000

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GENERAL INFORMATION

APPENDIX

(b) Interest in the associated companies

• (i) (a) Interest in shares of China Resources Enterprise, Limited (‘‘CRE’’)

As at the Latest Practicable Date, the interests of the Directors in the shares of CRE as recorded in the register maintained by the Company pursuant to Section 29 of the SDI Ordinance were as follows:

	Number of
	shares held
	Personal	Family
Name of Director	Interest	Interest
Mr. Song Lin	—	200,000
Mr. Ning Gaoning	1,630,000	—

• (b) Interest in options of CRE

As at the Latest Practicable Date, the following Directors had personal interests within the meaning of the SDI Ordinance in respect of options granted under the existing share option schemes of CRE as follows:

	Number of options
Name of Director	shares held
Mr. Song Lin	2,200,000*
Mr. Ning Gaoning	4,500,000

• (* 2,000,000 options shares were granted to Mr. Song Lin and 200,000 options shares were granted to a staff member of CRE whose spouse is Mr. Song Lin).

• (ii) Interest in options of China Resources Land Limited (‘‘CR Land’’)

As at the Latest Practicable Date, the following Director had personal interests within the meaning of the SDI Ordinance in respect of options granted under the existing share option scheme of CR Land as follows:

	Number of options
Name of Director	shares held
Mr. Ning Gaoning	5,000,000

Save as disclosed above, none of the Directors or any of their associates or chief executive of the Company had any interests in the share capital or options over the share capital of the Company or any of its associated corporations as defined in the SDI Ordinance which are required to be notified to the Company and the Stock Exchange pursuant to section 28 of the SDI Ordinance (including interest which they were taken or deemed to have under section 31 of, or Part I of the Schedule to, the SDI Ordinance) or which are required, pursuant to section 29 of the SDI Ordinance, to be entered in the register referred to therein or which are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies in the Listing Rules, to be notified to the Company and the Stock Exchange.

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GENERAL INFORMATION

APPENDIX

(c) Others

As at the Latest Practicable Date, none of the Directors was materially interested in any contracts or arrangements to which any member of the Group was a party and which are significant to the business of the Group.

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group or which are proposed to be acquired or disposed of by or leased to any member of the Group since 31st December, 2001 (being the date to which the latest published audited accounts of the Company were made up).

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, the register of substantial shareholders maintained by the Company pursuant to Section 16(1) of the SDI Ordinance showed that the Company was notified of the following shareholders with an interest representing 10% or more of the issued share capital of the Company:

		Percentage of
	Number of	issued share
Name of Substantial Shareholders	shares held	capital
Gold Touch Enterprises Inc. (‘‘Gold Touch’’)	297,229,604	11.35%
Waterside Holdings Limited (‘‘Waterside’’)	535,347,743	20.44%
Splendid Time Investments Inc. (‘‘Splendid Time’’)	1,109,688,810	42.37%
CRH	1,942,266,157	74.16%
China Resources National Corp. (‘‘CRN’’)	1,942,266,157	74.16%

Gold Touch, Waterside and Splendid Time each directly holds 297,229,604 Shares, 535,347,743 Shares and 1,109,688,810 respectively in the Company. Gold Touch, Waterside and Splendid Time are wholly owned subsidiaries of CRH, which in turn is a wholly owned subsidiary of CRN.

CRN is the holding company of CRH and therefore is deemed to have the same interests in the share capital of the Company as CRH by virtue of Section 8 of the SDI Ordinance.

4. SERVICE CONTRACT

None of the Directors has entered or is proposing to enter into any service contract with any member of the Group (excluding contracts expiring or determinable within one year without payment of compensation other than statutory compensation).

5. LITIGATION

Neither the Company nor any other member of the Group is engaged in any litigation or arbitration of material importance and so far as the Directors are aware no litigation, arbitration or claim of material importance is pending or threatened by or against the Company or any member of the Group.

6. GENERAL

• (a) The secretary of the Company is Mr. Lee Yip Wah, Peter, who is a solicitor of the High Court of Hong Kong.

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GENERAL INFORMATION

APPENDIX

• (b) The principal share registrar and transfer office is Butterfield Corporate Services Limited at Rosebank Centre, 11 Bermudiana Road, Pembroke, Bermuda. The Hong Kong branch registrar and transfer office is Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong.

• (c) The English text of this circular shall prevail over the Chinese text.

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