Novautek Technologies Group Limited — M&A Activity 2000

Dec 11, 2000

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

This announcement appears for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for Shares.

KONG SUN HOLDINGS LIMITED

(incorporated in Hong Kong with limited liability)

SHARE TRANSACTION

The Board announces that the Agreement was entered into on 8th December, 2000 between the Vendor and Simply Success in relation to the acquisition of Healthy. The major asset of Healthy is 50% shareholding interest in Genesis. Genesis is a holding company and through its subsidiaries engages in financial services, administrative services, management consulting and strategic investments.

Pursuant to the Agreement, the Vendor and Simply Success have agreed that Simply Success will acquire the Sale Share at a total consideration of HK$4,000,000 (subject to adjustment). HK$1,160,000 was settled in cash upon execution of the Agreement as deposit and partial payment. Part of the consideration of HK$2,340,000 for the Acquisition will be settled by the issue of 6,500,000 new Shares at HK$0.36 each representing approximately 1.11% of the existing issued share capital and 1.09% of the share capital of the Company as enlarged by the issue of the Consideration Shares. The remaining consideration of HK$500,000 (subject to adjustment) will be settled, after certain conditions are fulfilled, by cash payment upon Completion.

The Acquisition constitutes a share transaction for the Company under the Listing Rules.

1. THE AGREEMENT

Date of the Agreement

8th December, 2000

Parties

Vendor: Mr. So, the legal and beneficial owner of Healthy. Healthy owns 50% of the issued share capital of Genesis. Mr. So, Healthy and Genesis are independent of, and not connected with, the Company and the Directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules).

Purchaser: Simply Success, a wholly-owned subsidiary of the Company

Sale Share

1 share of US$1.00 in nominal value, being the entire issued share capital of Healthy.

Consideration

HK$4,000,000 in aggregate (subject to adjustment), of which HK$1,160,000 (the "Deposit") was settled in cash upon execution of the Agreement as deposit and partial payment. HK$2,340,000 will be satisfied by the allotment and issue to the Vendor or its designated persons of the Consideration Shares at an issue price of HK$0.36 per Consideration Share. The remaining consideration of HK$500,000 (subject to adjustment) will be satisfied by cash payment, upon Completion ("Cash Consideration"). The total consideration is arrived at on an arm's length basis after taking into consideration, among other factors, the goodwill and the net asset value of Healthy and Genesis as shown in their management accounts as at 30th November, 2000.

The issue price of HK$0.36 per Consideration Shares represents:

(i) a premium of about 2.86% to the closing price of HK$0.35 per Share as quoted on the Stock Exchange on 8th December, 2000, being the date of the Agreement; and

(ii) a discount of about 1.10% to the average of the closing prices as quoted on the Stock Exchange for the ten trading days immediately prior to and including 8th December, 2000 of HK$0.364 per Share.

The Consideration Shares represent (i) about 1.11% of the existing issued share capital of the Company as at the date of the Agreement; and (ii) about 1.09% of the Company's issued share capital as enlarged by the issue of the Consideration Shares.

The Consideration Shares will be allotted and issued under the general mandate granted by the shareholders of the Company to the Directors at the Annual General Meeting of the Company held on 28th June, 2000. The Consideration Shares will rank pari passu in all respect with all Shares in issue upon Completion.

Conditions Precedent

If the following conditions precedent are not fulfilled on or before 23rd January, 2001 or such later date as the parties may agree, the Agreement will become null and void and of no further force and effect:

(a) approval obtained from the Securities and Futures Commission to the change in substantial shareholder of Genesis Global Strategies Limited ("GGS"), a wholly-owned subsidiary of Genesis, pursuant to the Securities and Futures Commission Ordinance (Cap. 24 of the Laws of Hong Kong); and

(b) the Listing Committee of the Stock Exchange granting listing of and permission to deal in the Consideration Shares to be allotted and issued by the Company upon Completion.

Completion

Completion is expected to take place on the second Business Day after which the conditions precedent set out above are satisfied (or such other date as the parties may agree in writing prior to Completion).

Adjustment to the Cash Consideration

Based on the unaudited accounts of Genesis as at 30th November, 2000, its net asset value was approximately HK$3.4 million. If the amount of the Net Assets as shown in the audited Closing Accounts shall be less than HK$1,660,000, the Cash Consideration payable by the Company on Completion shall be reduced on a dollar for dollar basis. If the amount of the Net Assets as shown in the audited Closing Accounts shall be greater than HK$1,660,000, the Cash Consideration payable by the Company shall be increased on a dollar for dollar basis. Any amount so payable shall be paid within 2 Business Days from the issue of the Closing Accounts.

2. INFORMATION ON GENESIS

Healthy is a company incorporated in the British Virgin Islands and is presently wholly-owned by the Vendor. As at the date of this announcement, Healthy has an issued share capital of US$1 represented by 1 ordinary share of US$1.00 in nominal value.

Genesis is a company incorporated in the British Virgin Islands and is presently owned as to 50% by Healthy. As at the date of this announcement, Genesis has an issued share capital of US$400 represented by 400 ordinary shares of US$1.00 each. According to the unaudited accounts of Genesis for the year ended 31st March, 2000, its net asset value and net profit were approximately HK$6.1 million and HK$3.2 million respectively. According to its audited accounts for the year ended 31st March 1999, Genesis recorded a net loss of approximately HK$2.1 million.

Genesis commenced operations in October 1998 and its major subsidiaries include GGS and Genesis Management Services Limited ("GMS"). GGS is a securities dealer and investment adviser registered under the Securities Ordinance (Cap. 333 of the Laws of Hong Kong) and provides corporate finance and asset management services for listed companies and investors in Hong Kong. GMS provides administrative services for GGS and clients.

3. REASON FOR THE ACQUISITION

The principal activities of the Company is investment holding while its subsidiaries are engaged in property holding, securities brokerage, investment activities, provision of loan finance, information technology training and software development services. The Directors believe that the Acquisition will contribute to the aim of broadening the Group's asset and income base as well as strengthening its core business by becoming a "one-stop" financial institution. The Directors consider the terms of the Acquisition to be fair and reasonable and in the best interests of the Group and the shareholders of the Company as a whole.

4. GENERAL

Pursuant to the Listing Rules, the Acquisition constitutes a share transaction for the Company. This announcement appears for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for Shares.

An application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares.

5. DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context otherwise requires.

"Acquisition" the acquisition by Simply Success of the Sale Share from the Vendor pursuant to the Agreement

"Agreement" the sale and purchase agreement dated 8th December, 2000 entered into between the Vendor and Simply Success in relation to the Acquisition

"Board" the board of Directors of the Company

"Business Day" a day (other than Saturday) on which banks are ordinarily open for business in Hong Kong

"Closing Accounts" the audited balance sheet and audited profit and loss account of Genesis for the year ended 31st March, 2000 and the proforma management accounts of Healthy and Genesis as at 30th November, 2000

"Company" Kong Sun Holdings Limited, a company incorporated in Hong Kong with limited liability and whose Shares are listed on the Stock Exchange

"Completion" completion of the Acquisition

"Consideration Shares" 6,500,000 new Shares to be allotted and issued to the Vendor in partial satisfaction of the consideration for the Acquisition pursuant to the Agreement

"Directors" the directors of the Company

"Group" the Company and its subsidiaries

"Genesis" Genesis Strategic (Holdings) Limited, a private company incorporated in the British Virgin Islands with limited liability

"Genesis Group" Genesis and its subsidiaries

"Healthy" Healthy Profit Enterprises Limited, a private company incorporated in the British Virgin Islands with limited liability

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

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

"Mr. So" So Hon Leung, Alvin

"Net Assets" net tangible assets of Healthy, after deducting certain assets and rights of Genesis Group, as at the date of Completion as shown by the Closing Accounts and the additional fixed assets to be acquired by Healthy

"Sale Share" 1 share of US$1.00 in nominal value, being the entire issued share capital of Healthy

"Share(s)" share(s) of HK$0.10 each in the share capital of the Company

"Simply Success" Simply Success International Limited, a company incoporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"Vendor" Mr. So

"HK$" Hong Kong dollar(s), the lawful currency of Hong Kong

"US$" US dollar(s), the lawful currency of the United States of America

"%" per cent.

By Order of the Board

KONG SUN HOLDINGS LIMITED

Kong Li Szu

Executive Director

Hong Kong, 8th December, 2000