Novautek Technologies Group Limited — M&A Activity 2001

Aug 30, 2001

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

江山控股有限公司

KONG SUN HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability)

Financial Adviser to Kong Sun Holdings Limited

UOB ASia (Hong Kong) Limited

POSSIBLE MAJOR TRANSACTION

FORMATION OF A Chinese-FOREIGN JOINT VENTURE COMPANY FOR

PROPERTY DEVELOPMENT IN XICHENG DISTRICT, BEIJING, THE PRC

On 27 August 2001, Kong Sun, through its wholly-owned subsidiary, Best Spot, and Beijing XiCheng signed the MOU to form a Chinese-foreign joint venture company (the "JV") to engage in property development in XiCheng District, Beijing, the PRC.

The JV will be formed with total investment costs of RMB360 million, of which RMB120 million will be the registered capital. Kong Sun will hold 90.1% and Beijing XiCheng will hold 9.9% of the JV.

Kong Sun's investment in the JV, including the future development costs of the property, will be about RMB324.36 million and will be financed by Kong Sun's internal resources and bank borrowings.

Beijing XiCheng and its beneficial owners are independent third parties not connected with Kong Sun directors, chief executive, substantial shareholders, subsidiaries or any associates of any of them (as associates are defined in the Listing Rules).

Should the JV agreement proceed as planned, it will constitute a major transaction under the Listing Rules and will be subject to the approval of Kong Sun shareholders at an extraordinary general meeting. Kong Fa and KSE are connected parties and closely allied group of shareholders under the Listing Rules. Since Kong Fa and KSE have a combined controlling interest of about 54.2% in Kong Sun and none of the Kong Sun shareholders is required to abstain from voting, they will sign a written certificate to approve this transaction in lieu of a formal shareholders' meeting. Further announcement with details of the JV agreement will be made when necessary.

At the request of Kong Sun, trading of its securities was suspended at 10:00 am on 28 August 2001. Kong Sun will apply to the Stock Exchange for trading resumption from 10:00 am on 30 August 2001.

The JV agreement may or may not be entered into and the proposed major transaction may or may not proceed. Investors should exercise caution when dealing in Kong Sun securities.

MEMORANDUM OF UNDERSTANDING DATED 27 AUGUST 2001 (the "MOU")

Parties to the MOU:

Best Spot Investments Limited, a wholly-owned subsidiary of Kong Sun

Beijing XiCheng Housing Construction Development Company

The JV

1. JV parties and equity interest held:

Parties Percentage of equity interest

Best Spot 90.1%

Beijing XiCheng 9.9%

1. Registered capital: RMB120 million

2. Expected total investment costs: RMB360 million

Information of the JV

Under the MOU, the JV will be principally engaged in property development in XiCheng District, Beijing, the PRC. The size of the site is about 20,045 square metres and the total buildable floor area above ground is about 44,880 square metres. The cost of acquiring the site is about RMB230 million.

It is expected that the JV agreement will be entered into on or before 12 September 2001.

Source of funding

Kong Sun's investment in the JV, including the future development costs of the property, will be about RMB324.36 million and will be financed by Kong Sun's internal resources and bank borrowings.

Reasons for forming the JV

Kong Sun is an investment holding company and its subsidiaries are principally engaged in property development and investment, finance, information technology development, as well as investment activities. In view of China's possible admission as a member of the World Trade Organisation and being the organiser of Olympic 2008, Kong Sun directors consider that it provides a good opportunity for Kong Sun to tap into the potential property market in Beijing. Kong Sun directors also believe that the transaction would strengthen Kong Sun's investment portfolio and broaden its income base.

Information on Beijing XiCheng

Beijing XiCheng was incorporated in 1985 and is a state-owned company engaging in real estate development. Under the administrative jurisdiction of the district government, Beijing XiCheng is managed by the City Construction Management Commission and controlled by Beijing City Development Office on a professional basis.

Connection between the parties

Beijing XiCheng and its beneficial owners are independent of and not connected with Kong Sun directors, chief executive, substantial shareholders, subsidiaries or any associates of any of them (as associates are defined in the Listing Rules).

Compliance with the Listing Rules

Should the JV agreement proceed as planned, it will constitute a major transaction under the Listing Rules and will be subject to the approval of Kong Sun shareholders at an extraordinary general meeting. Kong Fa and KSE are connected parties and closely allied group of shareholders under the Listing Rules. Since Kong Fa and KSE have a combined controlling interest of about 54.2% in Kong Sun and none of the Kong Sun shareholders is required to abstain from voting, they will sign a written certificate to approve this transaction in lieu of a formal shareholders' meeting. Further announcement with details of the JV agreement will be made when necessary.

Suspension and resumption

At the request of Kong Sun, trading of its securities was suspended at 10:00 am on 28 August 2001. Kong Sun will apply to the Stock Exchange for trading resumption from 10:00 am on 30 August 2001.

The JV agreement may or may not be entered into and the proposed major transaction may or may not proceed. Investors should exercise caution when dealing in Kong Sun securities.

Definitions

"Kong Fa" Kong Fa Holding Limited, a company incorporated in the British Virgin Islands and wholly-owned by Mr. Kong Look Sen (Kong Sun's chairman and managing director). Mr. Kong Li Jer and Mr. Kong Li Szu (Kong Sun's executive directors), and their associates (as associates are defined in the Listing Rules)

"KSE" Kong Sun Enterprise Sdn. Bhd., a company incorporated in Malaysia and wholly-owned by Mr. Kong Look Sen (Kong Sun's chairman and managing director). Mr. Kong Li Jer. (Kong Sun's executive director) and their associates (as associates are defined in the Listing Rules)

By Order of the Board

Kong Sun Holdings Limited

Kong Look Sen

Chairman and Managing Director

Hong Kong, 29 August 2001

"Please also refer to the published version of this announcement in the Hong Kong i-mail"