KPa-BM Holdings Limited — Proxy Solicitation & Information Statement 2007

Jul 12, 2007

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)

(Stock Code: 1193)

MAJOR AND CONNECTED TRANSACTION

Independent financial adviser to the Independent Board Committee and Independent Shareholders

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A letter from the Board is set out on pages 4 to 9 of this circular. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders in respect of the Disposal is set out on page 10 of this circular. A letter from CIMB-GK, the independent financial adviser, containing its advice to the Independent Board Committee and Independent Shareholders in respect of the Disposal is set out on pages 11 to 14 of this circular.

A notice convening a special general meeting of China Resources Logic Limited to be held at 4:15 p.m. on Monday, 30th July, 2007 at Rooms 4003-06, 40th Floor, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong is set out on pages 27 to 28 of this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event by not later than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so desire.

13th July, 2007

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
2. The Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
(a) The Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
(b) Information on CR Cooling Group. . . . . . . . . . . . . . . . . . . . . . . . . . .	6
(c) Reasons for the Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
(d) Financial effect of the Disposal on the Group . . . . . . . . . . . . . . . . . .	7
(e) Major and connected transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
3. Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
4. Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
5. Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Letter from CIMB-GK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix I – Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Appendix II – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
Accompanying document

1. Form of proxy

– i –

DEFINITIONS

For the purpose of this circular, the following expressions have the following meanings:

• “Agreement” the sale and purchase agreement dated 21st June, 2007 and entered into between CRT as vendor, Gradison as purchaser and CRL as guarantor for CRT pursuant to which CRT agreed to sell the entire issued share capital of CR Cooling to Gradison

• “associates” shall have the meaning ascribed to it under the Listing Rules

• “Bank Consent” the written consent for the Disposal contemplated under the Agreement from the majority of lenders in a facility agreement entered into on 14th March, 2007 among CRL, the borrower, the arrangers, the original lenders and the agent more particularly described in the said facility agreement in which a 5-year revolving credit/term loan facility of up to HK$1,500 million was made available to the borrower named therein

• “Board” the board of Directors “CIMB-GK” CIMB-GK Securities (HK) Limited, a licensed corporation for types 1 (Dealing in Securities), 4 (Advising on Securities) and 6 (Advising on Corporate Finance) regulated activities under the SFO, appointed as the independent financial adviser to the Independent Board Committee

“Company” or “CRL” 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” means the 5th business day (excluding Saturday or Sunday) after the date of the SGM on which the Agreement has been approved by the Independent Shareholders of the Company and CRL having obtained the Bank Consent, or such other date as the Company and Gradison may agree

– 1 –

DEFINITIONS

“CR Cooling”	China Resources Cooling Technology Co. Ltd. which is
	incorporated in the British Virgin Islands, is an indirectly
	wholly owned subsidiary of the Company, and is the
	holding company of the CR Cooling Group which are
	engaged in the Group’s air-conditioner compressor
	business
“CR Cooling Group”	CR Cooling together with its subsidiaries, namely CR
	Sanyo and Shengrun Sanyo
“CR Sanyo”	China Resources (Shenyang) Sanyo Compressor Co.,
	Ltd., a non-wholly owned subsidiary of CR Cooling
	incorporated in the PRC and beneficially owned as to
	63.75% by CR Cooling, 34.25% by Sanyo Electric and
	2% by Toyota Tsusho
“CRH”	China Resources (Holdings) Company Limited, a
	company incorporated in Hong Kong
“CRT”	CRT (BVI) Limited, a company incorporated in the
	British Virgin Islands, is a directly wholly owned
	subsidiary of the Company and directly owns CR Cooling
“Directors”	the director(s) of the Company
“Disposal”	the sale of the entire issued share capital of CR Cooling
	to Gradison contemplated under the Agreement
“Gradison”	Gradison Limited, a company incorporated in the British
	Virgin Islands and is a wholly owned subsidiary of CRH
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“Hong Kong GAAP”	Generally Accepted Accounting Principles in Hong Kong
“Independent Board Committee”	an independent committee of the Board, comprising
	independent non-executive Directors, which has been
	appointed by the Board to advise Independent
	Shareholders on the Disposal contemplated under the
	Agreement

“Independent Shareholders” Shareholder(s) other than CRH and its associates

– 2 –

DEFINITIONS

“IC”	integrated circuit, a tiny group of electronic components
	and their connections produced on a slice of materials
	such as silicon
“Latest Practicable Date”	10th July, 2007, 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
“percentage ratios”	the percentage ratios referred to in Rule 14.07 of the
	Listing Rules
“PRC”	The People’s Republic of China
“Sanyo Electric”	Sanyo Electric Co., Ltd., a company incorporated in
	Japan with limited liability and beneficially interested in
	34.25% of the equity interests in each of CR Sanyo and
	Shengrun Sanyo
“SFO”	Securities and Futures Ordinance, Chapter 571 of the
	laws of Hong Kong
“SGM”	special general meeting of the Company to be convened
	to approve the Agreement
“Shareholders”	the shareholder(s) of the Company
“Shengrun Sanyo”	Shenyang Shengrun Sanyo Compressor Co., Ltd., a
	non-wholly owned subsidiary of CR Cooling
	incorporated in the PRC and beneficially owned as to
	63.75% by CR Cooling, 34.25% by Sanyo Electric and
	2% by Toyota Tsusho
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Toyota Tsusho”	Toyota Tsusho Corporation, a company incorporated in
	Japan who is interested in 2% of the equity interests in
	each of CR Sanyo and Shengrun Sanyo; and save for its
	2% interests in each of CR Sanyo and Shengrun Sanyo,
	Toyota Tsusho is not connected with the Group and its
	connected person and is not a connected person of the
	Company as defined under the Listing Rules

– 3 –

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability) (Stock Code: 1193)

Directors: Executive Directors: ZHU Jinkun (Chairman) WANG Guoping (Chief Executive Officer) ONG Thiam Kin CHEN Cheng-yu, Peter

Non-executive Directors: JIANG Wei LIU Yanjie LI Fuzuo

Registered Office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Principal Place of Business: Rooms 4003-06 40th Floor, China Resources Building 26 Harbour Road Wanchai Hong Kong

Independent Non-executive Directors: WONG Tak Shing LUK Chi Cheong KO Ping Keung YANG Chonghe, Howard

Company Secretary:

LEE Yip Wah, Peter

13th July, 2007

To the Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION

1. INTRODUCTION

The Company has, by an announcement dated 21st June, 2007, announced that the Company and CRT, the Company’s wholly owned subsidiary, have entered into the Agreement with Gradison for the sale of the entire issued share capital of CR Cooling. For the purpose of the Listing Rules, the Disposal contemplated under the Agreement constitutes a major transaction of the Company. Gradison is a wholly owned subsidiary of CRH, which is both a substantial and controlling shareholder of the Company. Gradison is therefore a connected person of the Company. The Disposal also constitutes a connected transaction of the Company and is conditional upon, among others, the approval by Independent Shareholders at the SGM.

– 4 –

LETTER FROM THE BOARD

The purposes of this circular are to provide you with further information relating to the Disposal contemplated under the Agreement, which includes (a) the recommendation and opinion of the Independent Board Committee and (b) the recommendation of CIMB-GK (in the form of a letter) setting out its recommendation to the Independent Board Committee and Independent Shareholders.

2. THE DISPOSAL

(a) The Agreement

• (i) Date

• 21st June, 2007

• (ii) Parties

• CRT as vendor

• Gradison as purchaser

• CRL as guarantor for the performance and obligations of CRT

(iii) Nature of transaction

CRT will sell to Gradison the entire issued share capital of CR Cooling, which is the holding company of the CR Cooling Group. The CR Cooling Group are engaged in the Group’s air-conditioner compressor business. CRL will guarantee the performance and obligations of CRT under the Agreement.

(iv) Consideration

The consideration (“Consideration”) has been arrived at after arm’s length negotiations between the vendor and purchaser after taking into account, among others, the reduced turnover and profitability of CR Cooling Group during 2006 due to falling sale prices as a result of the excess capacity in PRC air-conditioner compressor industry, and the current and future prospects with references to the prevailing commercial and business conditions in which the CR Cooling Group operates. The Consideration is HK$1,170,000,000, which will be satisfied by Gradison in full by cash at Completion.

Based on the reduced turnover and profitability of the CR Cooling Group in recent years and the increasing competition and raw material costs in the air-conditioner compressor manufacturing industry, it is expected the profitability of the Group’s air-conditioner compressor business will continue to decline in the foreseeable future. The Consideration represents approximately 20 times the attributable unaudited consolidated after tax net profit of CR Cooling Group for the

– 5 –

LETTER FROM THE BOARD

year ended 31st December, 2006 and some 10 percent premium over the attributable unaudited consolidated net asset value of CR Cooling Group as at 31st December, 2006. The average price to earning ratio of the Hang Seng Industrial Goods Sub-index as at 20th June, 2007 was about 6.54 times, thus the Company considers that the Consideration is favourable to the Company.

(v) Condition precedent

Completion of the Agreement is conditional upon (i) the passing of a resolution by Independent Shareholders at a SGM of the Company approving the Agreement and (ii) CRL having received the Bank Consent. There is no long-stop date for the Agreement.

The Directors, including independent non-executive Directors (who have taken into account the advice of CIMB-GK), consider that the terms of the Agreement, including the Consideration, was negotiated on an arm’s length basis and are on normal commercial terms and is fair and reasonable to and in the interests of the Company and Shareholders as a whole.

(b) Information on CR Cooling Group

The CR Cooling Group are engaged in the air-conditioner compressor business. The CR Cooling Group consist of CR Cooling and its non-wholly owned subsidiaries namely, CR Sanyo and Shengrun Sanyo. CR Cooling is the holding company of the CR Cooling Group. CR Sanyo and Shengrun Sanyo are both joint ventures with Sanyo Electric and Toyota Tsusho whereby Sanyo Electric and Toyota Tsusho respectively owns 34.25% and 2% beneficial interests in each of CR Sanyo and Shengrun Sanyo. The CR Cooling Group is a leading PRC air-conditioner compressor supplier and has an annual production capacity of about 6 million compressor units. The unaudited consolidated net profits (both before and after taxation and extraordinary items) of the CR Cooling Group for the past two financial years ended 31st December, 2006, prepared under the Hong Kong GAAP, are as follows:

	**Year ended 31st **	December,
	2005	2006
	HK$ million	HK$ million
Consolidated net profit before taxation,
extraordinary items and minority interests	271.0	104.9
Consolidated net profit attributable to
shareholders	153.3	60.4

– 6 –

LETTER FROM THE BOARD

The unaudited consolidated net asset of CR Cooling Group, prepared under Hong Kong GAAP, as of 31st December, 2006 was approximately HK$1,062.7 million.

Prior to Completion, the CR Cooling Group are subsidiaries of the Company and its results are consolidated into those of the Group before the Disposal. After Completion, the CR Cooling Group will cease to be subsidiaries of the Company and the Company will no longer have any interest in the CR Cooling Group.

(c) Reasons for the Disposal

The Group currently carries on the semiconductor and air-conditioner compressor businesses. The Group’s semiconductor business, riding on the double digit growth rate of the PRC’s semiconductor market, has been growing rapidly in recent years. The trend is expected to continue in the foreseeable future. Conversely the performance of the Group’s air-conditioner compressor business, due to excess industry capacity and escalating raw material costs, has seen rapid erosion in gross margin and profitability in recent years.

The Group, in its continuing effort to divest its non-core businesses, has disposed of its information technology and office furniture businesses in recent years. The Company has by way of announcement dated 2nd January, 2003 and 8th November, 2005 disclosed respectively the disposal of the Group’s information technology and office furniture businesses. The Disposal is part of the Group’s continuing effort in this respect. By disposing of the air-conditioner compressor business, the Group will become a single business entity and can concentrate its resources for the development of its rapidly growing semiconductor business.

(d) Financial effect of the Disposal on the Group

The Group is engaged in the semiconductor and air-conditioner compressor businesses. The contribution of the air-conditioner compressor business to the Group has been reducing vis-a`-vis the semiconductor business. For the year ended 31st December, 2006, its percentage contribution to the Group’s turnover was 40% (2005 – 47%); operating profit was 31% (2005 – 62%); operating cash flow was 38% (2005 – 48%) and attributable net profit was 20% (2005 – 52%). For the year ended 31st December, 2006, the semiconductor’s percentage contribution to the Group’s turnover, operating profit, operating cash flow and attributable net profit was 60%, 69%, 62% and 80% respectively. After the Disposal, the Group can concentrate its resources for the development of its semiconductor business and the Group has no intention to change its core semiconductor business.

The Group expects to record a gain of approximately HK$63.7 million on the Disposal which the Group will recognize in its financial statements for the year ending 31st December, 2007. The gain represents the difference between the Disposal Consideration and the carrying value of the assets of the CR Cooling Group, which is

– 7 –

LETTER FROM THE BOARD

about HK$1,106.3 million, upon the Completion of the Disposal. Upon Completion, the CR Cooling Group will cease to be subsidiaries of the Company, the consolidated assets and the liabilities of the Group will be reduced by the assets and liabilities of the CR Cooling Group upon Completion. Taking into account the Consideration received by the Company at Completion, the consolidated net assets of the Group will be increased by HK$3 million.

The sale proceeds of the Disposal will be used partly to repay outstanding loans. The Company has announced, by way of an announcement dated 14th March, 2007, that a 5-year revolving credit/term loan facility of up to HK$1,500 million was made available to the Group for refinancing of the Group’s previous loans and for the Group’s general corporate funding requirements. The said loan facility is unsecured, interest bearing and to be repaid in full on the date falling 60 months after 14th March, 2007. As at the Latest Practicable Date, HK$1,070 million has been drawndown. The sale proceeds will also be used for investment in semiconductor business and as working capital requirement of the Group. The Company has not yet determined the breakdown in respect of the usage of the sale proceeds.

(e) Major and connected transaction

Gradison is a wholly owned subsidiary of CRH, which is both a substantial and controlling shareholder of the Company. Gradison is therefore a connected person of the Company. As such, the Disposal contemplated under the Agreement is a connected transaction of the Company.

As the Consideration of the Disposal exceeds 2.5% of each of the relevant percentage ratios as referred to in Chapter 14A of the Listing Rules, the Disposal is subject to Independent Shareholders’ approval pursuant to Rule 14A.17 of the Listing Rules. Since the Consideration also exceeds 25% but is less than 75% of each of the relevant percentage ratios set out in Chapter 14 of the Listing Rules, the Disposal also constitutes a major transaction under the Listing Rules.

3. SPECIAL GENERAL MEETING

Set out on pages 27 to 28 of this circular is a notice convening the SGM to be held at Rooms 4003-06, 40th Floor, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong at 4:15 p.m. on Monday, 30th July, 2007. The SGM will be held for the purpose of considering and, if thought fit, approving the Agreement.

A form of proxy for use at the SGM is enclosed herewith. Whether or not you are able to attend the SGM, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon to the principal place of business of the Company at Rooms 4003-06, 40th Floor, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong as soon as possible but in any event not later than 48 hours before the time appointed for the holding of the SGM. Completion of the form of proxy will not preclude you from attending and voting at the SGM or any adjourned meeting should you so desire.

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LETTER FROM THE BOARD

According to Rule 13.39(4) of the Listing Rules, any vote taken at the SGM shall be taken by way of poll. The Company shall announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

4. RECOMMENDATIONS

Your attention is drawn to (i) the letter from the Independent Board Committee set out in this circular which contains its recommendations to the Independent Shareholders concerning the Disposal; and (ii) the letter from CIMB-GK set out in this circular which contains its recommendations to the Independent Board Committee and Independent Shareholders in relation to the Disposal and the principal factors and reasons considered by CIMB-GK in arriving at its recommendations.

The Independent Board Committee, having taken into account the advice of CIMB-GK, considers that the Disposal contemplated under the Agreement is fair and reasonable and is in the interests of the Company and the Shareholders as a whole. Accordingly, the Board, including members of the Independent Board Committee, unanimously recommend that Independent Shareholders vote in favour of the ordinary resolution to be proposed at the SGM to approve the Agreement. CRH and its associates, who have material interests in the Disposal contemplated under the Agreement, shall abstain from voting on the ordinary resolution.

5. ADDITIONAL INFORMATION

The Group is engaged in the semiconductor and air-conditioner compressor businesses. After Completion, the Group will engage in the semiconductor business. Each of CRT and Gradison is an investment holding company and is not engaged in any other businesses.

Your attention is also drawn to the additional information set out in the Appendices.

Yours faithfully,

On behalf of the Board

CHINA RESOURCES LOGIC LIMITED ZHU Jinkun Chairman

– 9 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1193)

13th July, 2007

To the Independent Shareholders of the Company

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION

We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders in respect of the Disposal pursuant to the Agreement, details of which are set out in the letter from the Board in this circular dated 13th July, 2007 (the “Circular”) to the Shareholders, of which this letter forms part. Unless the context otherwise requires, terms defined in the Circular shall have the same meanings when used in this letter.

Your attention is drawn to the advice of CIMB-GK, the independent financial adviser appointed, in respect of the Disposal as set out in the letter from CIMB-GK in the Circular.

Having taken into account the advice of CIMB-GK, we consider that the Disposal is on normal commercial terms and is in the interests of the Company and its shareholders as a whole and the terms of the Agreement are fair and reasonable so far as the Company and the Independent Shareholders are concerned. We therefore recommend that you vote in favour of the ordinary resolution to be proposed at the SGM to approve the Agreement.

Yours faithfully, Independent Board Committee

LUK Chi Cheong

Independent Non-executive Director

WONG Tak Shing

Independent Non-executive Director

KO Ping Keung

Independent Non-executive Director

YANG Chonghe, Howard Independent Non-executive Director

– 10 –

LETTER FROM CIMB-GK

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25/F., Central Tower 28 Queen’s Road Central Hong Kong 13 July 2007

To the Independent Board Committee and the Independent Shareholders of China Resources Logic Limited

Dear Sirs,

MAJOR AND CONNECTED TRANSACTION

We refer to our engagement as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Agreement and the transactions contemplated thereunder, details of which are contained in a circular (the “Circular”) to the Shareholders dated 13 July 2007, of which this letter forms part. Expressions used in this letter have the same meanings as defined in the Circular unless the context otherwise requires.

An independent board committee comprising Messrs. Wong Tak Shing, Luk Chi Cheong, Ko Ping Keung and Yang Chonghe, Howard, being all the independent non-executive Directors, has been formed to advise the Independent Shareholders in relation to the Agreement. Any vote of the Independent Shareholders at the SGM shall be taken by poll. CRH with a material interest in the Agreement and its associates will abstain from voting in relation to the resolution approving the Agreement and the transactions contemplated thereunder.

In formulating our recommendation, we have relied on the information and facts contained or referred to in the Circular as well as the representations made or provided by the Directors and senior management of the Company. The Directors have declared in a responsibility statement set out in the Appendix to the Circular that they collectively and individually accept full responsibility for the accuracy of the information contained and representations made in the Circular. We have also assumed that the information and the Directors’ representations contained or referred to in the Circular were true and accurate at the time they were made and continue to be so at the date of the despatch of the Circular. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. We have also been advised by the Directors and believe that no material facts have been omitted from the Circular.

We consider that we have reviewed sufficient information to reach an informed view, to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation. We have not, however, conducted an independent verification of the information nor have we conducted any form of in-depth investigation into the businesses and affairs or the prospects of the Company or any of their respective subsidiaries or associates.

– 11 –

LETTER FROM CIMB-GK

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Agreement, we have considered the following principal factors and reasons:

Background and rationale

The Group is principally engaged in the semiconductor and air-conditioner compressor businesses. Gradison is a wholly-owned subsidiary of CRH, which is a substantial and controlling shareholder of the Company. Pursuant to the Agreement, CRT, a wholly-owned subsidiary of the Company, will dispose of the entire issued share capital of CR Cooling, the holding company of the CR Cooling Group, to Gradison for a consideration of HK$1,170 million. The CR Cooling Group is principally engaged in the air-conditioner compressor business. The unaudited consolidated net profits (before and after taxation and extraordinary items) of the CR Cooling Group for the two years ended 31 December 2006 prepared under the HK GAAP, were as follows:

	For the year ended	For the year ended
	31 December
	2005	2006
	(HK$’ million)	(HK$’ million)
Net profits before taxation, extraordinary items
and minority interests	271.0	104.9
Net profit attributable to shareholders	153.3	60.4

The unaudited consolidated net asset value of CR Cooling Group prepared under HK GAAP was approximately HK$1,062.7 million as at 31 December 2006.

As noted from the annual report of the Company for the year ended 31 December 2006, due to excess production capacity in the industry and rising raw material costs, the Group’s air-conditioner compressor business has performed below expectation. Turnover of the Group’s air-conditioner compressor business amounted to approximately HK$1,364.3 million for the year ended 31 December 2006, representing a decrease of approximately 4.8% as compared to that of approximately HK$1,433.1 million for the year ended 31 December 2005. Operating profit of the Group’s air-conditioner compressor business also decreased significantly from approximately HK$276.9 million in 2005 to HK$113.9 million in 2006, representing a decrease of approximately 58.9% over the period. We have discussed with the management of the Company as regards the market conditions and the industry prospects of the air-conditioner compressors business in the PRC and have been given to understand by the Directors that they do not expect such unfavourable market conditions will improve in the near term.

– 12 –

LETTER FROM CIMB-GK

We note from the letter from the Board that the Group has, in its continuing effort to divest its non-core businesses, disposed of its information technology and office furniture businesses in recent years. We also note from the annual report of the Company that the Group will continue to expand its semiconductor business which has become the key growth driver of the Group’s revenue. The Directors consider that the Disposal will provide the Group with additional funds of HK$1,170 million and will enable the Company to apply its resources more efficiently for the development of the growing semiconductor business.

In view of the foregoing, we concur with the view of the Directors that the Disposal will enable the Company to apply additional resources for the Group’s existing core business, that is, the semiconductor business, which is in line with the stated business objective of the Company, and is in the interest of the Company and the Shareholders as a whole.

The consideration

The consideration for the Disposal of HK$1,170 million (the “Consideration”) has been arrived at after arm’s length negotiations among the parties concerned with reference to the financial position and performance of the CR Cooling Group. The Consideration represents (i) approximately 20.0 times the attributable unaudited consolidated after tax net profit of the CR Cooling Group for the year ended 31 December 2006; and (ii) a premium of approximately 10.0% over the Company’s attributable interest in the unaudited consolidated net asset value of the CR Cooling Group as at 31 December 2006.

In assessing the fairness and reasonableness of the Consideration, we have identified and reviewed the financial performance of the comparable listed companies (the “Listed Comparable”) in Hong Kong whose business is similar to those of the CR Cooling Group. Details of the price-earning ratio (“PER”) and the price to net asset value (“PNAV”) of the Listed Comparable are as follows:

		Historical	Historical
**Name **	of the Listed Comparable	PER	PNAV
		(times)	(times)
		(Note)	(Note)
China	Metal International Holdings Inc.	18.85	2.19

Note: Calculated based on the closing price of shares of the Listed Comparable as at 21 June 2007, being the date of the Agreement, and their latest published audited financial statements.

As noted from the table above, the 20.0 times PER as implied under the Consideration is higher than the historical PER of the Listed Comparable. For reference purpose, we have also reviewed and noted that the 1.1 times PNAV as implied under the Consideration is lower than the historical PNAV of the Listed Comparable of approximately 2.19 times. However, as the

CR Cooling Group is engaged in manufacture of compressor business that is in general have a recurrent income base, we consider it more appropriate to make reference to the PER comparison. Furthermore, given that there is only one relevant Listed Comparable, we have also reviewed the valuation of the Hang Seng Industrial Goods Sub-index as at the date of the Agreement, and noted that the Hang Seng Industrial Good Sub-index traded at approximately 6.54 times as at such date as compared to the 20.0 times PER implied under the Consideration.

– 13 –

LETTER FROM CIMB-GK

Having taken into account the above, we consider that the Consideration is fair and reasonable so far as the Company and the Independent Shareholders are concerned.

POSSIBLE FINANCIAL EFFECT

Net asset value

Given that the Consideration exceeds the unaudited consolidated net asset value attributable to the Group’s interests in the CR Cooling Group, the Group expects to record an estimated gain of approximately HK$63.7 million on the Disposal, which the Group will recognize in its financial statements for the year ending 31 December 2007. The actual amount of gain on the Disposal will be recorded at Completion.

Earnings

The earnings contribution from the CR Cooling Group will cease as a result of the Disposal.

Working capital

As the proceeds of the Disposal of HK$1,170 million will be payable in cash, the working capital position of the Group will be enhanced upon Completion.

RECOMMENDATION

Having considered the principal factors and reasons referred to the above, we consider that the Agreement is in the interests of the Company and the Shareholders as a whole and the terms thereof are fair and reasonable so far as the Company and the Independent Shareholders are concerned. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Agreement.

Yours faithfully, For and on behalf of

CIMB-GK Securities (HK) Limited

Alex Lau Flavia Hung Executive Vice President Senior Vice President

– 14 –

FINANCIAL INFORMATION

APPENDIX I

1. STATEMENT OF INDEBTEDNESS

At the close of business on 31st May, 2007, being the latest practicable date for the purpose of ascertaining information contained in this section headed “Statement of Indebtedness” prior to the printing of this circular, the Group has secured bank borrowings of approximately HK$99.6 million which were secured by charges over certain equipments and land use rights of the Group with an aggregate net book value of approximately HK$161.3 million; unsecured bank borrowings of approximately HK$2,287.5 million, and unsecured notes payable of approximately HK$681.1 million, and unsecured obligation under long term payables of approximately HK$66.0 million. In addition, the Group has at that date contingent liabilities in respect of guarantees for mortgage loans borrowed by the employees of a subsidiary of approximately HK$4.0 million.

Saved as disclosed above and apart from intra-group liabilities, the Group did not have any outstanding mortgages, charges, debentures or other loan capital issued and outstanding or agreed to be issued, bank overdrafts or loans or other similar indebtedness, hire-purchase commitments, liabilities under acceptance (other than normal trade bills) or acceptance credits, guarantees or other material contingent liabilities at the close of business on 31st May, 2007.

2. WORKING CAPITAL STATEMENT

The Directors, after due and careful consideration, are of the opinion that taking into account the present internal resources of the Group, the banking facilities presently available and the estimated net proceeds from the Disposal, the Group has sufficient working capital to meet its present requirements for at least the next 12 months from the date of this circular.

3. FINANCIAL AND TRADING PROSPECT

The Group will continue to expand its semiconductor business by organic growth, external acquisitions and by exploring the forming of strategic partnerships with both overseas and Chinese enterprises. The Group will continue to focus on and benefit from the rapidly increasing demand in the PRC for analogue IC’s. Further, the Group will continue to expand its test and assembly business, its operating fabless design house as well as open foundry service. The Group will strive to continually enhance its technical capability within the consumer IC and discrete device market segment via infusion of talents and forging strategic and technical alliances with foreign partners. It is expected that the growth of the Group’s semiconductor business over the past few years will continue and will contribute positively to the Group’s turnover and profitability in 2007 and thereafter.

– 15 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. 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 the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

Save as disclosed below, as at the Latest Practicable Date, none of the Directors, chief executive of the Company and their associates had any interests or short positions in any shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are deemed or taken to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified to the Company and the Stock Exchange:

(a) Interests in issued ordinary shares and underlying shares of the Company

				Number of	Aggregate
		Long or short	Number of	share	percentage
Name of Director	Capacity	position	shares	options1	of interest2
Mr. Zhu Jinkun	Beneficial Owner	Long position	2,370,000	6,100,000	0.310%
	Interest of Spouse	Long position	160,000	–
Mr. Wang Guoping	Beneficial Owner	Long position	1,108,000	3,000,000	0.148%
Mr. Ong Thiam Kin	Beneficial Owner	Long position	1,100,000	4,500,000	0.201%
Mr. Jiang Wei	Beneficial Owner	Long position	–	720,000	0.026%
Mr. Liu Yanjie	Beneficial Owner	Long position	–	510,000	0.018%
Mr. Li Fuzuo	Beneficial Owner	Long position	–	510,000	0.018%
Mr. Wong Tak Shing	Beneficial Owner	Long position	–	500,000	0.018%
Mr. Luk Chi Cheong	Beneficial Owner	Long position	–	900,000	0.032%
Mr. Ko Ping Keung	Beneficial Owner	Long position	–	900,000	0.032%

– 16 –

GENERAL INFORMATION

APPENDIX II

Notes:

1. This refers to the number of underlying shares of the Company covered by the share options granted under the share option schemes of the Company, such options being unlisted physically settled equity derivatives, particulars of which as required to be disclosed under Rule 17.07(1) of the Listing Rules are set out in Note 3 below.

2. This represents the percentage of aggregate long position in ordinary shares and underlying shares to the total issued share capital of the Company as at the Latest Practicable Date.

3. Particulars of share options referred to in Note 1 above:

Name of Director Date of grant Exercise price per share (HK$)	Number of share options
	Outstanding as at 1st January, 2007 Exercised during the period Outstanding as at Latest Practicable Date
Mr. Zhu Jinkun 25/04/20011 0.547 02/10/20024 0.570 09/04/20036 0.479 13/01/20047 0.906 Mr. Wang Guoping 09/04/20036 0.479 13/01/20048 0.906 Mr. Ong Thiam Kin 25/04/20011 0.547 02/10/20024 0.570 09/04/20036 0.479 13/01/20048 0.906 Mr. Jiang Wei 09/04/20029 0.820 Mr. Liu Yanjie 09/04/200210 0.820 Mr. Li Fuzuo 09/04/200210 0.820 Mr. Wong Tak Shing 22/05/20022 0.920 13/01/20047 0.906 Mr. Luk Chi Cheong 22/05/20022 0.920 02/10/20023 0.570 09/04/20035 0.479 13/01/20047 0.906 Mr. Ko Ping Keung 22/05/20022 0.920 09/04/20035 0.479 13/01/20047 0.906	1,000,000 – 1,000,000 800,000 – 800,000 2,800,000 – 2,800,000 1,500,000 – 1,500,000 2,000,000 – 2,000,000 1,000,000 – 1,000,000 2,000,000 – 2,000,000 1,000,000 – 1,000,000 500,000 – 500,000 1,000,000 – 1,000,000 720,000 – 720,000 510,000 – 510,000 510,000 – 510,000 300,000 – 300,000 200,000 – 200,000 300,000 – 300,000 200,000 – 200,000 200,000 – 200,000 200,000 – 200,000 500,000 – 500,000 200,000 – 200,000 200,000 – 200,000

Notes:

1. The exercisable period is divided into 2 tranches exercisable during the periods from 25th April, 2003 and 2004 to 24th April, 2011.

2. The exercisable period during which the options may be exercised is from 22nd May, 2002 to 21st May, 2012.

3. The exercisable period during which the options may be exercised is from 2nd October, 2002 to 1st October, 2012.

– 17 –

GENERAL INFORMATION

APPENDIX II

1. The exercisable period is divided into 3 tranches exercisable during the periods from 2nd October, 2003, 2004 and 2005 to 1st October, 2012.

2. The exercisable period during which the options may be exercised is from 9th April, 2003 to 8th April, 2013.

3. The exercisable period is divided into 3 tranches exercisable during the periods from 9th April, 2004, 2005 and 2006 to 8th April, 2013.

4. The exercisable period during which the options may be exercised is from 13th January, 2004 to 12th January, 2014.

5. The exercisable period is divided into 3 tranches exercisable during the periods from 13th January, 2005, 2006 and 2007 to 12th January, 2014.

6. The exercisable period is divided into 2 tranches exercisable during the periods from 9th April, 2002 and from 1st January, 2003 to 8th April, 2012.

7. The exercisable period is divided into 4 tranches exercisable during the periods from 9th April, 2002 and from 1st January, 2003, 2004 and 2005 to 8th April, 2012.

(b) Interests in issued ordinary shares and underlying shares of China Resources Enterprise, Limited (“CRE”), an associated corporation of the Company

				Number of	Aggregate
		Long or short	Number of	share	percentage
Name of Director	Capacity	position	shares	options1	of interest2
Mr. Zhu Jinkun	Interest of Spouse	Long position	42,000	–	0.002%
Mr. Jiang Wei	Beneficial Owner	Long position	240,000	–	0.010%

Notes:

1. This refers to the number of underlying shares of CRE covered by the share options granted under the share option schemes of CRE, such options being unlisted physically settled equity derivatives.

2. This represents the percentage of aggregate long position in ordinary shares and underlying shares to the total issued share capital of CRE as at the Latest Practicable Date.

3. (c) Interests in issued ordinary shares and underlying shares of China Resources Power Holdings Company Limited (“CRP”), an associated corporation of the Company

				Number of	Aggregate
		Long or short	Number of	share	percentage
Name of Director	Capacity	position	shares	options1	of interest2
Mr. Zhu Jinkun	Beneficial Owner	Long position	–	500,000	0.013%

– 18 –

GENERAL INFORMATION

APPENDIX II

				Number of	Aggregate
		Long or short	Number of	share	percentage
Name of Director	Capacity	position	shares	options1	of interest2
Mr. Wang Guoping	Beneficial Owner	Long position	–	450,000	0.012%
Mr. Ong Thiam Kin	Beneficial Owner	Long position	150,000	100,000	0.006%
Mr. Jiang Wei	Beneficial Owner	Long position	–	1,600,000	0.042%
Mr. Liu Yanjie	Beneficial Owner	Long position	–	550,000	0.014%
Mr. Li Fuzuo	Beneficial Owner	Long position	–	750,000	0.019%

Notes:

1. This refers to the number of underlying shares of CRP covered by the share options granted under the share option scheme of CRP, such options being unlisted physically settled equity derivatives, particulars of which as required to be disclosed under Rule 17.07(1) of the Listing Rules are set out in Note 3 below.

2. This represents the percentage of aggregate long position in ordinary shares and underlying shares to the total issued share capital of CRP as at the Latest Practicable Date.

3. Particulars of share options referred to in Note 1 above:

Number of share options

	Number of share options
Name of Director Date of grant Exercise price per share (HK$)	Outstanding as at 1st January, 2007 Exercised during the period Outstanding as at Latest Practicable Date
Mr. Zhu Jinkun 12/11/20031 2.800 500,000 – 500,000 Mr. Wang Guoping 12/11/20031 2.800 450,000 – 450,000 Mr. Ong Thiam Kin 12/11/20031 2.800 250,000 150,000 100,000 Mr. Jiang Wei 12/11/20031 2.800 1,000,000 – 1,000,000 18/03/20052 3.990 600,000 – 600,000 Mr. Liu Yanjie 12/11/20031 2.800 250,000 – 250,000 18/03/20052 3.990 300,000 – 300,000 Mr. Li Fuzuo 12/11/20031 2.800 450,000 – 450,000 18/03/20052 3.990 300,000 – 300,000

Notes:

1. The options are exercisable in 5 tranches, from 6th October, 2004, 2005, 2006, 2007 and 2008 to 5th October, 2013.

2. The options are exercisable in 5 tranches, from 18th March, 2006, 2007, 2008, 2009 and 2010 to 17th March, 2015.

– 19 –

GENERAL INFORMATION

APPENDIX II

• (d) Interests in issued ordinary shares and underlying shares of China Resources Land Limited (“CR Land”), an associated corporation of the Company

				Number of	Aggregate
		Long or short	Number of	share	percentage
Name of Director	Capacity	position	shares	options1	of interest2
Mr. Jiang Wei	Beneficial Owner	Long position	892,000	–	0.024%
Mr. Liu Yanjie	Beneficial Owner	Long position	300,000	500,000	0.021%
Mr. Li Fuzuo	Beneficial Owner	Long position	500,000	500,000	0.027%

Notes:

1. This refers to the number of underlying shares of CR Land covered by the share options granted under the share option scheme of CR Land, such options being unlisted physically settled equity derivatives, particulars of which as required to be disclosed under Rule 17.07(1) of the Listing Rules are set out in Note 3 below.

2. This represents the percentage of aggregate long position in ordinary shares and underlying shares to the total issued share capital of CR Land as at the Latest Practicable Date.

3. Particulars of share options referred to in Note 1 above:

Name of Director Date of grant Exercise price per share (HK$)	Number of share options
	Outstanding as at 1st January, 2007 Exercised during the period Outstanding as at Latest Practicable Date
Mr. Liu Yanjie 01/06/20051 1.230 Mr. Li Fuzuo 01/06/20051 1.230	500,0002 – 500,000 500,0002 – 500,000

Note:

1. The options are exercisable in 4 tranches, from 1st June, 2006, 2007, 2008 and 2009 to 31st May, 2015.

(e) Interests in CSMC Technologies Corporation (“CSMC”), a subsidiary of the Company

				Number of	Aggregate
		Long or short	Number of	shares	percentage
Name of Director	Capacity	position	shares	allocated1	of interest2
Mr. Chen Cheng-yu,	Beneficial Owner	Long position	37,293,200	2,330,000	1.450%
Peter

Notes:

1. This refers to the number of CSMC’s shares allocated to Mr. Chen under the equity incentive plan of CSMC, such shares allocated being unlisted physically settled equity derivatives, particulars of which as required to be disclosed under Rule 17.07(1) of the Listing Rules are set out in Note 3 below.

– 20 –

GENERAL INFORMATION

APPENDIX II

1. This represents the percentage of aggregate long position in ordinary shares and underlying shares to the total issued share capital of CSMC as at the Latest Practicable Date.

2. Particulars of shares allocated referred to in Note 1 above:

Name of Director Date of grant Exercise Price per share (HK$)	Number of shares allocated
	Outstanding as at 1st January, 2007 Exercised during the period Outstanding as at Latest Practicable Date
Mr. Chen Cheng-yu, Peter 01/10/20031 0.078	2,330,000 – 2,330,000

Note:

1. The exercisable period during which the options may be exercised is from 13th August, 2004 to 13th August, 2008.

3. SUBSTANTIAL SHAREHOLDERS

Save as disclosed below, the Directors and chief executive of the Company are not aware that there was any party (other than a Director or chief executive of the Company), who, as at the Latest Practicable Date had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote at general meeting of any other member of the Group:

(a) Long position in the Company

				Percentage of
				aggregate long
				position in shares
				to the issued
				share capital of
			Number of	the Company as
		Nature of	ordinary	at the Latest
Name of Shareholder	Capacity	interests	shares	Practicable Date
Gold Touch Enterprises Inc.	Beneficial Owner	Beneficial Interest	297,229,604	10.68%
(“Gold Touch”)
Waterside Holdings Limited	Beneficial Owner	Beneficial Interest	535,347,743	19.24%
(“Waterside”)
Splendid Time Investments	Beneficial Owner	Beneficial Interest	1,109,688,810	39.88%
Inc. (“Splendid”)

– 21 –

GENERAL INFORMATION

APPENDIX II

				Percentage of
				aggregate long
				position in shares
				to the issued
				share capital of
			Number of	the Company as
		Nature of	ordinary	at the Latest
Name of Shareholder	Capacity	interests	shares	Practicable Date
China Resources (Holdings)	Beneficial Owner	Beneficial Interest	4,836,000	0.17%
Company Limited
(“CRH”)
China Resources (Holdings)	Interest of	Corporate Interest	1,942,266,157	69.81%
Company Limited	Controlled
(“CRH”)	Corporation
CRC Bluesky Limited	Interest of	Corporate Interest	1,947,102,157	69.98%
(“CRC Bluesky”)	Controlled
	Corporation
China Resources Co.,	Interest of	Corporate Interest	1,947,102,157	69.98%
Limited (“CRCL”)	Controlled
	Corporation
China Resources National	Interest of	Corporate Interest	1,947,102,157	69.98%
Corp. (“CRN”)	Controlled
	Corporation

Gold Touch, Waterside and Splendid each directly holds 297,229,604 shares, 535,347,743 shares and 1,109,688,810 shares respectively in the Company as at the Latest Practicable Date. Gold Touch, Waterside and Splendid are wholly owned subsidiaries of CRH, which is therefore deemed to own 1,942,266,157 shares of the Company as at the Latest Practicable Date. In addition, CRH directly owns 4,836,000 shares in the Company. CRH is a wholly owned subsidiary of CRC Bluesky. CRC Bluesky is a wholly owned subsidiary of CRCL, which in turn is 99.98% owned by CRN. CRN is deemed to have interest in 1,947,102,157 shares.

The Company’s Director namely, Mr. Zhu Jinkun is a director of Waterside, CRH, CRCL and CRN. The Company’s Director namely, Mr. Jiang Wei is a director of Gold Touch, Waterside, CRH, CRCL and CRN.

– 22 –

GENERAL INFORMATION

APPENDIX II

(b) Of other members of the Group

So far as is known to any Director or chief executive of the Company, as at the Latest Practicable Date, the following persons were, directly or indirectly, interested in 10% or more of the share capital carrying rights to vote at general meetings of the following members of the Group:

	Name of substantial	Percentage of
Members of the Group	Shareholder	shareholding
CR Sanyo	Sanyo Electric	34.25%
Shengrun Sanyo	Sanyo Electric	34.25%
Micro Assembly Technologies	STATS ChipPAC Ltd.	25.00%
Limited

4. PROCEDURE TO DEMAND A POLL

Pursuant to bye-law 78 of the Bye-Laws of the Company, at any general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is taken as may from time to time be required under the Listing Rules or any other applicable laws, rules or regulations or unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded:

• (i) by the Chairman of the meeting; or

• (ii) by at least three members present in person (or, in the case of a member being a corporation, by its duly authorized representative) or by proxy for the time being entitled to vote at the meeting; or

• (iii) by any member or members present in person (or, in the case of a member being a corporation, by its duly authorized representative) or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

• (iv) by a member or members present in person (or, in the case of a member being a corporation, by its duly authorized representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

– 23 –

GENERAL INFORMATION

APPENDIX II

5. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has entered or proposed to enter into a service contract with any member of the Group which is not determinable by the employer within one year without payment of compensation (other than statutory compensation).

6. DIRECTORS INTERESTS IN CONTRACTS

As at the Latest Practicable Date, none of the Directors has any interest, direct or indirect, in any asset which since 31st December, 2006, the date to which the latest published audited financial statements of the Group were made up, have been acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement which is significant in relation to the businesses of the Group.

7. NO MATERIAL CHANGES

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31st December, 2006, the date to which the latest published audited financial statements of the Group were made up.

8. EXPERT

The following is the qualification of the expert who has given an opinion or advice contained in this circular:

Name CIMB-GK	Qualification a licensed corporation for types 1 (Dealing in Securities), 4 (Advising on Securities) and 6 (Advising on Corporate Finance) regulated activities under the SFO

As at the Latest Practicable Date, CIMB-GK does not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for shares in any member of the Group. As at the Latest Practicable Date, CIMB-GK does not have any interest, direct or indirect, in any asset which since 31st December, 2006, the date to which the latest published audited financial statements of the Group were made up, have been acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group.

CIMB-GK has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter as set out in this circular and references to its name in the form and context in which they appear in this circular.

– 24 –

GENERAL INFORMATION

APPENDIX II

9. COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors or their respective associates has an interest in a business apart from the Company’s business which competes or is likely to compete, either directly or indirectly, with the Group’s businesses.

10. LITIGATION

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

11. GENERAL

• (a) The secretary of the Company is Mr. LEE Yip Wah, Peter who is a practising solicitor in Hong Kong, a consultant of Messrs. Woo Kwan Lee & Lo, Solicitors and Notaries, and a China Appointed Attesting Officer.

• (b) The qualified accountant of the Company appointed pursuant to Rule 3.24 of the Listing Rules is Mr. ONG Thiam Kin, who is a fellow member of the Association of Chartered Certified Accountants in the United Kingdom, the Hong Kong Institute of Certified Public Accountants and members of the national accounting bodies of Singapore and Malaysia.

• (c) The registered office of the Company is situated at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda and the principal place of business of the Company is situated at Rooms 4003-06, 40th Floor, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong.

• (d) The Company’s Hong Kong branch share registrar is Secretaries Limited, which is situated at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

12. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the Group within the two years immediately preceding the date of this circular and up to the Latest Practicable Date and which are or may be material:

• (a) the Agreement;

• (b) an asset sale and purchase agreement dated 22nd June, 2006 and entered into among Wuxi CR Micro-Assemb. Tech. Ltd. (“ANST”), a subsidiary of the Company, the Company, STATS ChipPAC Shanghai Co. Ltd. (“SCC”) and STATS ChipPAC Ltd. (“SCL”) in which ANST purchased certain assets from SCC for a consideration of US$35,000,000;

– 25 –

GENERAL INFORMATION

APPENDIX II

• (c) a manufactuer’s representative agreement dated 22nd June, 2006 entered into among ANST, the Company, STATS ChipPAC (BVI) Limited (“SCBL”) and SCL in which SCBL shall solicitor orders for ANST in its business in return for ANST paying commission fees;

• (d) a subscription agreement dated 22nd June, 2006 and entered into among Wuxi China Resources Microelectronics (Holdings) Limited (“Wuxi CRM”), a wholly owned subsidiary of the Company, the Company, Micro Assembly Technologies Limited (“MAT”), a subsidiary of the Company, and SCL in which SCL would subscribe 1,000,000 shares in MAT for a consideration of US$10,000,000;

• (e) a joint venture agreement dated 22nd June, 2006 and entered into among Wuxi CRM, MAT, ANST, the Company and SCL for the establishment of a joint venture with MAT being the joint venture company; and

• (f) a sale and purchase agreement dated 8th November, 2005 between the Company and Emax Capital Limited (“Emax”) pursuant to which the Company agreed to sell and Emax agreed to buy the entire issued capital of Palazzo Inc., which is the holding company of all members of the Group engaging in the furniture business for a consideration of HK$183,000,000.

13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at Rooms 4003-06, 40th Floor, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong, the principal place of business of the Company, from the date of this circular up to and including the date of SGM:

• (a) the memorandum and articles of association of the Company;

• (b) the Agreement;

• (c) the material contracts referred to in the paragraph headed “Material Contracts” of this appendix;

• (d) the letter from the Independent Board Committee, the text of which is set out on page 10 of this circular;

• (e) the letter from CIMB-GK, the text of which is set out on pages 11 to 14 of this circular;

• (f) the written consent of CIMB-GK referred to in this appendix to this circular; and

• (g) the annual reports of the Company for each of the financial years ended 31st December, 2005 and 31st December, 2006.

– 26 –

NOTICE OF SPECIAL GENERAL MEETING

==> picture [306 x 71] intentionally omitted <==

(Incorporated in Bermuda with limited liability) (Stock Code: 1193)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting of China Resources Logic Limited (the “Company”) will be held at Rooms 4003-06, 40th Floor, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong at 4:15p.m. on Monday, 30th July, 2007 for the purpose of considering and, if thought fit, passing, with or without amendments, the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT the sale and purchase agreement dated 21st June, 2007 and entered into among the Company, CRT (BVI) Limited, a wholly owned subsidiary of the Company and Gradison Limited (the “Agreement”), a copy of which marked “A” has been produced to the meeting and signed by the Chairman of the meeting for the purpose of identification, pursuant to which CRT (BVI) Limited agree to sell the entire issued share capital of China Resources Cooling Technology Co. Ltd. to Gradison Limited for a consideration of HK$1,170,000,000 and all the transactions contemplated thereunder be and is hereby approved, and the directors of the Company (or any one of them) and the directors of CRT (BVI) Limited (or any one of them) be and are hereby authorized for and on behalf of the Company and CRT (BVI) Limited to sign, seal, execute, perfect, deliver and do all such documents, deeds, acts, matters and things as they may in their discretion consider necessary or desirable or expedient for the purpose of, or in connection with, the Agreement and to make and agree to such variations of a non-material nature in or to the terms of the Agreement as they may in their discretion consider to be desirable and in the interests of the Company and CRT (BVI) Limited.”

By Order of the Board China Resources Logic Limited LEE Yip Wah, Peter Company Secretary

Hong Kong, 13th July, 2007

– 27 –

NOTICE OF SPECIAL GENERAL MEETING

Registered office:

Canon’s Court 22 Victoria Street Hamilton HM 12

Bermuda

Principal place of business: Rooms 4003-06 40th Floor, China Resources Building 26 Harbour Road Wanchai Hong Kong

Notes:

1. Any member entitled to attend and vote at the above meeting may appoint one or more proxies to attend and, on a poll, vote instead of him. A proxy need not be a member of the Company.

2. In order to be valid, a form of proxy together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy thereof, must be deposited at the Company’s principal place of business not less than 48 hours before the time appointed for holding the meeting. Completion and return of a form of proxy will not preclude you from attending and voting in person if you are subsequently able to be present.

3. According to Rule 13.39(4) of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “Listing Rules”), any vote taken at the special general meeting shall be taken by poll. The Company shall announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

4. As at the date of this notice, the Executive Directors of the Company are Mr. ZHU Jinkun, Mr. WANG Guoping, Mr. ONG Thiam Kin and Mr. CHEN Cheng-yu, Peter, the Non-executive Directors of the Company are Mr. JIANG Wei, Mr. LIU Yanjie and Mr. LI Fuzuo and the Independent Non-executive Directors of the Company are Mr. WONG Tak Shing, Mr. LUK Chi Cheong, Mr. KO Ping Keung and Mr. YANG Chonghe, Howard.

– 28 –