Persistence Gold Group Ltd — M&A Activity 2003

Feb 13, 2003

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this document, you should consult a stockbroker or other registered dealer in securities, a bank manager, solicitor, professional accountant, or other professional adviser.

If you have sold or transferred all your shares in Ying Wing Holdings Limited, you should at once hand this document and the accompanying form to the purchaser(s) or the transferee(s) or to the bank or stockbroker or other agent through whom the sale was effected for transmission to the purchaser(s) or the transferee(s).

MANDATORY GENERAL OFFER

by

Kingsway SW Securities Limited

on behalf of

ANGEL FIELD LIMITED

(Incorporated in the British Virgin Islands with limited liability)

to acquire all the issued shares

of

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Ying Wing Holdings Limited

(Incorporated in Bermuda with limited liability)

at a price of HK$0.418 per share (other than those already held by Angel Field Limited or parties acting in concert with it)

Financial adviser to Angel Field Limited

Kingsway Capital Limited

A letter from Kingsway SW Securities Limited containing, among other things, the details of the terms of the Offer is set out on pages 5 to 12 of this document.

The procedures for acceptance and settlement of the Offer are set out on pages 11 to 12 and in Appendix I to this document and in the accompanying form of acceptance and transfer. Acceptances of the Offer should be received by Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong by no later than 4:00 p.m. on Thursday, 11th April, 2002 or such later date as Angel Field Limited may determine and announce.

14th March, 2002

CONTENTS

	Page
Expected timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Letter from Kingsway Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix I – Further terms of the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix II – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17

– i –

EXPECTED TIMETABLE

Offer commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Thursday, 14th March, 2002

Expected date of despatch of the Offeree Document . . . . . . . . . . . . .Thursday, 28th March, 2002

Latest time and date for receiving acceptance . . . . . . . 4:00 p.m. on Thursday, 11th April, 2002

Closing date of the Offer (Note 1) . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Friday, 12th April, 2002

Latest date for posting of remittances

for the amount due under the Offer

in respect of valid acceptances received

on or before the latest time for acceptance (Note 2) . . . . . . . . . . . . Saturday, 20th April, 2002

Notes:

1. The Offer will close at 9:30 a.m. on Friday, 12th April, 2002 unless the Offeror revises or extends the Offer in accordance with the Takeovers Code. Following the close of the Offer, an announcement of the result of the Offer will be published on Friday, 12th April, 2002

2. The consideration payable for the Shares tendered under the Offer will be paid within 10 days after the receipt by the Registrar of the requisite documents from the accepting Shareholders. Please refer to the paragraph headed “Acceptance and settlement” in the letter from Kingsway Securities on pages 11 to 12 of this document.

3. Although the Offeror does not intend to extend the Offer, it reserves the right to do so.

4. Acceptance of the Offer shall be irrevocable and incapable of being withdrawn, except as permitted under the Takeovers Code.

All time references contained in this document refer to Hong Kong time.

– 1 –

DEFINITIONS

In this document, the following expressions have the meanings respectively set opposite them unless the context otherwise requires:

• “Announcement”

• the joint announcement by the Offeror and Ying Wing dated 25th January, 2002 relating to, among other things, the terms of the S&P Agreement and the Offer

• “CCASS” the Central Clearing and Settlement System, established and operated by Hong Kong Securities Clearing Company Limited

• “Completion” completion of the S&P Agreement

• “Disposal”

• the disposal of the Snack Food Business Companies by Park Well pursuant to the Disposal Agreement

• “Disposal Agreement” the conditional agreement dated 22nd January, 2002 entered into between Feng Lin and Park Well relating to the disposal by Park Well of its entire interest in the Snack Food Business Companies to Feng Lin

• “Executive”

• the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

• “Feng Lin”

• Feng Lin Holdings Ltd., a company incorporated in the British Virgin Islands with limited liability which sold the Sale Shares to the Offeror

• “Group”

• Ying Wing and its subsidiaries

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “Independent Third Parties”

• parties not connected nor acting in concert with the directors, chief executives or substantial shareholders of Ying Wing or any of its subsidiaries or an associate of any of them

• “Kingsway Capital”

• Kingsway Capital Limited, an investment adviser registered under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong), a fellow subsidiary of Kingsway Securities and the financial adviser to the Offeror in relation to the Offer

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DEFINITIONS

• “Kingsway Securities”

• Kingsway SW Securities Limited, a fellow subsidiary of Kingsway Capital and a dealer registered under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong)

• “Latest Practicable Date”

• 11th March, 2002, being the latest practicable date prior to the printing of this document for the purpose of ascertaining certain information for inclusion in this document

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Mr. Chau” Mr. Chau Ching Ngai, one of the directors of and the sole beneficial owner of the entire issued share capital of the Offeror

• “Offer” the mandatory unconditional cash offer being made by Kingsway Securities, on behalf of the Offeror, to acquire all the issued Shares not already owned by the Offeror or parties acting in concert with it at HK$0.418 per Offer Share on the terms and subject to the conditions contained in this document and the form of acceptance in respect thereof

• “Offer Share(s)”

• all the issued Share(s) (other than the Sale Shares)

• “Offeree Document”

• the response document to be issued by Ying Wing to the Shareholders in accordance with the provisions of the Takeovers Code containing, among other thing, the recommendation of the independent board committee of Ying Wing and the advice of the independent financial advisers of such independent board committee in respect of the Offer, and is expected to be despatched within 14 days of the date of this document

• “Offeror”

• Angel Field Limited, a company incorporated in the British Virgin Islands with limited liability and is beneficially and solely owned by Mr. Chau

• “Park Well”

• Park Well International Group Ltd., a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of Ying Wing

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DEFINITIONS

• “PRC”

the People’s Republic of China

• “Registrar”

• Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong, being Ying Wing’s branch registrar in Hong Kong

• “Relevant Period”

• the period between 25th July, 2001, being the date falling six months prior to the date of the Announcement, and the Latest Practicable Date

• “S&P Agreement”

• the conditional sale and purchase agreement dated 22nd January, 2002 entered into between, among others, Feng Lin and the Offeror relating to the sale and purchase of the Sale Shares

• “Sale Shares”

• a total of 148,000,000 Shares, representing 74.00% of the existing issued share capital of Ying Wing, sold to the Offeror pursuant to the S&P Agreement

• “SFC”

• Securities and Futures Commission

• “Share(s)”

• share(s) of HK$0.10 each in the share capital of Ying Wing

• “Shareholder(s)” holder(s) of Share(s)

• “Snack Food Business Companies”

• Cai Yi Feng Trading Limited, Hanover VCL Trading Limited, Transfit Garments Limited, Vastco (H.K.) Limited, VCL Business Development (USA) Inc. and Vastco (Shantou F.T.Z.) Industrial Limited, all of which were indirect subsidiaries of Ying Wing prior to completion of the Disposal

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Takeovers Code”

the Hong Kong Codes on Takeovers and Mergers

• “Ying Wing”

• Ying Wing Holdings Limited, a company incorporated in Bermuda with limited liability, the securities of which are listed on the Stock Exchange

• “HK$” Hong Kong dollars

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LETTER FROM KINGSWAY SECURITIES

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Kingsway SW Securities Limited

5th Floor, Hutchison House 10 Harcourt Road Central, Hong Kong

14th March, 2002

To the Shareholders

Dear Sir or Madam,

MANDATORY GENERAL OFFER BY KINGSWAY SW SECURITIES LIMITED ON BEHALF OF ANGEL FIELD LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF

YING WING HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED BY ANGEL FIELD LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

On 28th January, 2002, the Offeror and Ying Wing jointly announced that the Offeror and Feng Lin, Ying Wing’s former controlling Shareholder, entered into the S&P Agreement whereby Feng Lin conditionally agreed to sell to the Offeror the Sale Shares. The S&P Agreement was completed on 12th March, 2002. After the Completion, the Offeror and parties acting in concert with it became interested in 148,000,000 Shares, representing 74.00% of the issued share capital of Ying Wing. As a result of the Completion, the Offeror is obliged under Rule 26 of the Takeovers Code to make a general offer to acquire all the Offer Shares currently in issue not already owned by the Offeror or parties acting in concert with it. In compliance with the Takeovers Code, Kingsway Securities is making the Offer on behalf of the Offeror.

This letter sets out the details of the terms of the Offer and information on the Offeror. Acceptance of the Offer is subject to the terms set out in Appendix I to this document and in the form of acceptance and transfer accompanying this document. Under the Takeovers Code, the Offeree Document is expected to be sent to you within 14 days from the date of this document and it will contain a letter from the independent board committee of Ying Wing formed to advise you on the Offer and a letter of advice from the independent financial advisers of such independent board committee in these respects. You are urged to wait for the receipt of the Offeree Document and read the contents thereof before deciding whether or not to accept the Offer.

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LETTER FROM KINGSWAY SECURITIES

THE OFFER

Kingsway Securities is making unconditional cash Offer on behalf of the Offeror to acquire, on and subject to the terms and conditions set out in this document and in the accompanying form of acceptance and transfer, all the issued Shares other than those already owned by the Offeror and parties acting in concert with it on the following basis:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .HK$0.418 in cash

The offer price for each Offer Share equals the approximate effective price of HK$0.418 as paid by the Offeror for each Sale Share under the S&P Agreement and represents:

1. a discount of 62% to the closing price of HK$1.10 per Share as quoted on the Stock Exchange on 21st January, 2002, being the last full trading day before the suspension of trading of the Shares on the Stock Exchange as from 10:00 a.m. on 22nd January, 2002;

2. a discount of 62% to the average closing price of HK$1.10 per Share as quoted on the Stock Exchange for the ten consecutive full trading days before the suspension of trading of the Shares on the Stock Exchange as from 10:00 a.m. on 22nd January, 2002;

3. a discount of 16.4% to the closing price of HK$0.50 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

4. a discount of approximately 21.1% to the average closing price of HK$0.53 per Share as quoted on the Stock Exchange for the 10 consecutive trading days up to and including the Latest Practicable Date;

5. a discount of approximately 24.7% to the net asset value per Share of approximately HK$0.555 (based on the Ying Wing’s latest audited consolidated net asset value of HK$111,073,000 as at 31st December, 2000 as contained in the Ying Wing’s 2000 annual report);

6. a discount of approximately 15.6% to the net asset value per Share of approximately HK$0.495 (based on the Ying Wing’s latest unaudited consolidated net asset value of HK$99,021,000 as at 30th June, 2001 as contained in the Ying Wing’s 2001 interim report); and

7. a premium of approximately 26.3% over the pro forma unaudited adjusted consolidated net tangible asset value per Share upon completion of the Disposal of approximately HK$0.331 as shown in Ying Wing’s circular dated 22nd February, 2002 in relation to the Disposal.

– 6 –

LETTER FROM KINGSWAY SECURITIES

Ying Wing had no outstanding convertible securities, warrants or options in issue as at the Latest Practicable Date.

Total consideration

Based on the 52,000,000 Shares, representing 26.00% of the entire issued Shares of 200,000,000 Shares, which are subject to the Offer, the Offer is valued at HK$21,736,000.

Unconditional Offer

The Offer is unconditional in all respect.

Sufficiency of financial resources

The Offer is financed by Kingsway Securities from the bank facilities specifically arranged with Standard Chartered Bank for the purpose of financing the Offer. Kingsway Securities and Kingsway Capital are satisfied that there are sufficient financial resources available to the Offeror to satisfy full acceptance of the Offer.

The Offeror has confirmed that the repayment of interest, repayment of or security for any liability (contingent or otherwise) arising from the standby loan facility provided by Kingsway Securities will not depend to any significant extent on the business of Ying Wing.

Latest time for acceptances

The latest time for acceptances is 4:00 p.m. on Thursday, 11th April, 2002. The Offeror does not intend to extend the time for acceptance of the Offer but reserves the right to do so if and only if Ying Wing does not despatch the Offeree Document on or before 28th March, 2002 as required under the Takeovers Code.

Effect of accepting the Offer

By accepting the Offer, Shareholders will sell their Shares free from all liens, claims and encumbrances and with all rights attached, including the right to receive all dividends and distributions declared, made or paid after close of the Offer. Acceptances of the Offer shall be irrevocable and not be capable of being withdrawn, except as permitted under the Takeovers Code.

Stamp duty

Seller’s ad valorem stamp duty at the rate of HK$1.00 for every HK$1,000 or part thereof of the consideration will be deducted from the consideration payable to the Shareholders who accept the Offer for the Offer Shares.

– 7 –

LETTER FROM KINGSWAY SECURITIES

Dealings and holdings in the Shares

Save for the Sale Shares, neither the Offeror nor any of the parties acting in concert with it owned any Shares as at the Latest Practicable Date, nor has any of them dealt in the Shares during the period commencing from 25th July, 2001, being the date falling six months prior to the date of the S&P Agreement and ending on the Latest Practicable Date.

Undertaking from Feng Lin

Under the S&P Agreement, Feng Lin has undertaken to the Offeror that it will dispose of its remaining 964,000 Shares representing 0.48% of the issued Shares through the Stock Exchange prior to close of the Offer or it will tender the remaining Shares held by it for acceptance under the Offer.

INFORMATION ABOUT THE OFFEROR

Background

The Offeror is a private investment holding company incorporated in the British Virgin Islands with limited liability. Since its incorporation on 16th August, 2001, the Offeror has not carried on any business other than entering into the S&P Agreement.

The Offeror is directly and wholly-owned by Mr. Chau. Mr. Chau, aged 40, is a Hong Kong resident and has since 1997 been principally engaged in property investment in Hong Kong and the PRC. Mr. Chau has also invested in agriculture and high technology projects in the PRC, as well as engaging in trading of various industrial and consumer products including fabrics.

INTENTION OF THE OFFEROR REGARDING THE GROUP

Business of the Group

Ying Wing’s principal business has for many years been the processing of raw fabric and trading of fabric. It is the intention of the Offeror that Ying Wing will continue to be engaged in such business.

The Offeror has taken a positive view on the long term market potential and economic growth of the PRC after the accession of the PRC to the World Trade Organisation. Accordingly, the acquisition of Ying Wing is expected to enable the Offeror to capture business opportunities in the PRC as well as gain access to international fund raising arena. The Offeror also intends to leverage on the experience and business network of the new directors to be nominated by it to the board of Ying Wing to expand and improve the business operations of Group.

– 8 –

LETTER FROM KINGSWAY SECURITIES

In addition, the new directors to be nominated by the Offeror to the board of Ying Wing will review in detail the financial position and operation of the Group and will formulate longterm business plans and management strategy for the business of the Group. The directors of the Offeror may consider expanding the capital base of Ying Wing, if necessary, to enable Ying Wing to capitalise on suitable investment opportunities as they may arise in the future. In this connection, the new directors of Ying Wing will explore other business opportunities and consider whether any asset disposals (including redeployment of fixed asset in the ordinary course of business), asset acquisitions, business rationalisation, divestment and/or diversification will be appropriate in order to enhance the long term growth potential of the Group. However, the Offeror at present has not formulated any detailed plan yet.

There is no plan for the Offeror to inject any of its existing assets or businesses into Ying Wing or its subsidiaries.

Directors and management of the Group

It has been agreed that following the closing of the Offer, all the current directors of Ying Wing will resign. The Offeror presently intends to nominate the following persons to the board of directors of Ying Wing:

Ms. Mo Yu Ping, aged 39, will be the Chairman of Ying Wing, responsible for strategic planning and corporate development of the Group. Ms. Mo has over 10 years’ experience in trading building hardware and construction material. She also has investment in listed securities in Hong Kong. Ms. Mo is also a director of the Offeror.

Mr. Shi Zhi Hong, aged 70, will be an executive director of Ying Wing, responsible for market development of the Group. Mr. Shi graduated from the Department of Foreign Trade of Nankai University in the PRC in 1953. Since then, Mr. Shi has been engaged in the business of import and export, including the trading of fabric.

Ms. Gong Bei Ying, aged 27, will be an executive director of Ying Wing, responsible for the overall financial planning of the Group. Ms. Gong graduated from East China Normal University, majoring in international finance. Ms. Gong has five years’ experience in direct investment and investment in listed securities.

Mr. Shan Zhenglin, aged 54, will be an executive director of Ying Wing, responsible for the Group’s overall management and general administrative activities. Mr. Shan graduated from East China Normal University, majoring in real estate economics and is a senior economist and engineer. Mr. Shan has been engaged in real estate investment and property management. Mr. Shan is also a consultant to the Technology Development Centre of East China Normal University.

– 9 –

LETTER FROM KINGSWAY SECURITIES

Mr. Shi Zhi Hong will be appointed as a director of Ying Wing after the despatch of this document to the Shareholders and Ms. Mo Yu Ping, Ms. Gong Bei Ying and Mr. Shan Zhenglin will be appointed as directors of Ying Wing on or about the date on which the Offer closes.

The other additional directors of Ying Wing, including two independent non-executive directors, whom the Offeror intends to nominate to the board of directors of Ying Wing have not yet been determined.

Save as disclosed above, it is the intention of the Offeror that there will be no material change in the existing management and employees of the Group by reason only of the Offer.

MAINTAINING THE LISTING STATUS OF YING WING

The Offeror will not exercise the power of compulsory acquisition. It intends to maintain the listing of the Shares on the Stock Exchange. The Offeror and the new directors to be appointed to the board of Ying Wing will undertake to the Stock Exchange to take appropriate steps to ensure that not less than 25% of the Shares will be held by the public. When the Offer closes, should there be less than 25% of the Shares in public hands, the directors of the Offeror presently intend to take appropriate steps, which may include placing down the Offeror’s shareholding interest in the Company to members of the public within one month after the closing of the Offer. The Stock Exchange has stated that it will closely monitor trading in the Shares if, at the close of the Offer, less than 25% of the Shares are held by the general public.

If the Stock Exchange believes that

• a false market exists or may exist in the Shares;

• there are too few Shares in public hands to maintain an orderly market,

then it will consider exercising its discretion to suspend trading in the Shares. In this connection, it should be noted that upon completion of the Offer, there may be insufficient public float for the Shares and, therefore, trading in the Shares may be suspended until a sufficient level of public float is attained.

The Stock Exchange will also closely monitor all future acquisitions or disposals of assets by Ying Wing. The Stock Exchange has indicated that it has the discretion to require Ying Wing to issue a circular to its Shareholders irrespective of the size of any proposed transactions, particularly when such proposed transactions represent a departure from the principal activities of Ying Wing. The Stock Exchange also has the power to aggregate a series of transactions of Ying Wing and any such transactions may result in Ying Wing being treated as if it were a new listing applicant.

– 10 –

LETTER FROM KINGSWAY SECURITIES

TAXATION

Shareholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of accepting the Offer. It is emphasized that none of Kingsway Capital, Kingsway Securities, the Offeror and Ying Wing or any of their respective directors or any persons involved in the Offer accepts responsibility for any tax effects on, or liabilities of, any person or persons as a result of their acceptance of the Offer.

ACCEPTANCE AND SETTLEMENT

(a) Procedures for acceptance

To accept the Offer, you should complete the accompanying white form of acceptance in accordance with the instructions printed thereon, which instructions form part of the terms and conditions of the Offer.

The completed form of acceptance should then be forwarded, together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) for not less than the number of Shares in respect of which you intend to accept the Offer, by post or by hand, to the Registrar, Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong, in an envelope marked “Ying Wing Offer” as soon as possible but in any event not later than 4:00 p.m. on Thursday, 11th April, 2002 or such later date as the Offeror may determine and announce. No acknowledgement of receipt of any form of acceptance, Share certificate(s), transfer receipt(s) or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.

Your attention is drawn to the further details regarding the procedures for acceptance set out in Appendix I to this document and the accompanying form of acceptance. The attention of the Shareholders with registered addresses outside Hong Kong is also drawn to the section headed “General” in Appendix I to this document.

(b) Settlement

Provided that the form of acceptance and Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) are in complete and good order and have been received by the Registrar on or before 4:00 p.m. on Thursday, 11th April, 2002, a cheque for the amount due to the Shareholders in respect of the Shares tendered by them under the Offer, less seller’s ad valorem stamp duty payable by them, will be despatched to the Shareholders by ordinary post at their own risk within 10 days following the date on which all the relevant documents are received by the Registrar to render their acceptances complete and valid.

– 11 –

LETTER FROM KINGSWAY SECURITIES

Nominee registration

In order for beneficial owners of Shares whose investments are registered in nominee names to accept the Offer, it is essential that they provide instructions to their nominee agents of their intentions with regard to the Offer. To ensure equality of treatment of all holders of Shares, those registered holders of Shares who hold Shares as nominees for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately.

All documents and remittances will be sent to the Shareholders through ordinary post at their own risk. Such documents and remittances will be sent to Shareholders at their respective addresses as they appear in the register of members of Ying Wing or, in the case of joint Shareholders, to Shareholders whose names appear first in the said register of members, unless otherwise specified in the form of acceptance completed and returned by the Shareholders. None of Ying Wing, the Offeror, the parties acting in concert with the Offeror, Kingsway Capital and Kingsway Securities or any of their respective directors or any other person involved in the Offer will be responsible for any loss or delay in transmission or any other liabilities that may arise as a result thereof.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the Appendices which form part of this document.

Yours faithfully, For and on behalf of Kingsway SW Securities Limited Mary Lam Director

– 12 –

FURTHER TERMS OF THE OFFER

APPENDIX I

1. FURTHER PROCEDURES FOR ACCEPTANCE

• (a) If the certificate(s) and/or transfer receipt(s) and/or any other document(s) of title in respect of your Shares is/are in the name of a nominee company or some name other than your own, and you wish to accept the Offer in respect of your Shares, you must either:

• (i) lodge your Share certificate(s) and/or transfer receipts and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) with the nominee company, or other nominee, with instructions authorizing it to accept the Offer on your behalf and requesting it to deliver the duly completed form of acceptance together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or

• (ii) arrange for the Shares to be registered in your name by Ying Wing through the Registrar, and send the duly completed form of acceptance together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or

• (iii) if you have deposited your Shares with CCASS, instruct your broker to authorize CCASS to accept the Offer on your behalf and request it to deliver the duly completed form of acceptance together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title to the Registrar.

• (b) If the certificate(s) and/or transfer receipts and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are not readily available and/or is/are lost and you wish to accept the Offer in respect of your Shares, the form of acceptance should nevertheless be completed and delivered to the Registrar together with a letter stating that you have lost one or more of your Share certificate(s) and/or transfer receipts and/or other document(s) of title (and or any satisfactory indemnity or indemnities required in respect thereof) or that it/they is/are not readily available. If you find such document(s) or if it/they become(s) available, the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) should be forwarded to the Registrar as soon as possible thereafter. If you have lost your Share certificate(s), you should also write to the Registrar for a letter of indemnity which, when completed in accordance with the instructions given, should be returned to the Registrar.

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FURTHER TERMS OF THE OFFER

APPENDIX I

• (c) If you have lodged transfer(s) of any of your Shares for registration in your name and have not yet received your certificate(s), and you wish to accept the Offer in respect of your Shares, you should nevertheless complete the form of acceptance and deliver it to the Registrar together with the transfer receipt(s) duly signed by yourself. Such action will be deemed to be an authority to Kingsway Securities and/or the Offeror or their respective agent(s) to collect from Ying Wing for the Registrar on your behalf the relevant Share certificate(s) when issued and to deliver such certificate(s) to the Registrar as if it was/they were delivered to the Registrar with the form of acceptance.

• (d) Acceptance of the Offer may, at the discretion of the Offeror, be treated as valid even if not accompanied by the relevant Share certificate(s) and/or transfer receipt(s) and/ or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof), but, in such cases, the cheque(s) for the consideration due will not be despatched until the relevant Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or a satisfactory indemnity or indemnities in respect thereof) has/have been received by the Registrar or the company secretary of Ying Wing.

• (e) No acknowledgement of receipt of any forms of acceptance, Share certificate(s) and/ or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.

• (f) The address of the Registrar is 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong.

2. ACCEPTANCE PERIOD AND REVISIONS

Although the Offeror does not intend to extend the Offer, it reserves the right to do so. Unless the Offer has previously been extended, the Offer will close at 9:30 a.m. on Friday, 12th April, 2002 and all acceptance must be received by 4:00 p.m. on Thursday, 11th April, 2002.

3. ANNOUNCEMENTS

• (a) By 4:00 p.m. on the day before a closing date (or such later time and/or date as the Executive agrees), the Offeror shall inform the Executive and the Stock Exchange that the Offer has been closed or extended and shall publish an announcement by 9:30 a.m on the next business day to that effect. Such announcement will specify the total number of Shares and the percentage of the share capital in Ying Wing, as nearly as practicable, which the Offeror and parties acting in concert with it (as defined under the Takeovers Code) directly or indirectly, own or control, including

– 14 –

FURTHER TERMS OF THE OFFER

APPENDIX I

the number of Shares for which valid acceptances of the Offer have been received, and percentages of voting rights represented by these numbers, and the number of Shares otherwise acquired by the Offeror and any persons acting in concert with it during the period of the Offer.

• (b) In computing the number of Offer Shares represented by acceptances, there may be included or excluded for announcement purposes acceptances which are not in all respects in order or that are subject to verification.

• (c) As required under the Takeovers Code and the Listing Rules, any announcement in relation to the Offer, in respect of which the Executive and the Stock Exchange have confirmed that they have no further comments thereon, must be published as a paid announcement in at least one leading English language newspaper and one leading Chinese language newspaper being in each case a newspaper which is published daily and circulated generally in Hong Kong.

4. RIGHT OF WITHDRAWAL

Acceptance shall be irrevocable and cannot be withdrawn except in circumstances set out in Rule 19.2 of the Takeovers Code, which provides that if the Offeror is unable to comply with any of the requirements of making announcements relating to the Offer under the Takeovers Code as described under the section headed “Announcements” above, the Executive may require that acceptors be granted a right of withdrawal, on terms acceptable to the Executive, until such requirements can be met.

5. GENERAL

• (a) All communications, notices, forms of acceptance, certificates of Shares, transfer receipts, other documents of title and remittances to be delivered by or sent to or from Shareholders will be delivered by or sent to or from them, or their designated agents, at their own risk, and none of Ying Wing, the Offeror, or any of its agents accepts any liability for any loss in postage or any other liabilities that may arise as a result.

• (b) The provisions set out in the accompanying form of acceptance form part of the Offer.

• (c) The accidental omission to despatch this document and/or form of acceptance or any of them to any person to whom the Offer is made will not invalidate the Offer in any way.

• (d) The Offer and all acceptances will be governed by and construed in accordance with the laws of Hong Kong.

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FURTHER TERMS OF THE OFFER

APPENDIX I

• (e) Due execution of the form of acceptance will constitute an authority to any director of Ying Wing or such person or persons as Ying Wing may direct to complete and execute any document on behalf of the person accepting the Offer and to do any other act that may be necessary or expedient for the purposes of vesting in the Offeror or such person or persons as it may direct the Shares in respect of which such person has accepted the Offer.

• (f) Acceptance of the Offer by any person or persons will be deemed to constitute a warranty by such person or persons to the Offeror that the Shares acquired under the Offer are sold by any such person or persons free from all third party rights, liens, claims, charges, equities and encumbrances and together with all rights attaching thereto including the rights to receive all future dividends or other distributions declared, paid or made on the Shares after the closing of the Offer.

• (g) Seller’s ad valorem stamp duty, presently at the rate of HK$1.00 for every HK$1,000 or part thereof of the consideration arising in connection with the acceptance of Offer, is payable by accepting Shareholders and will be deducted from the cash amount due to such persons under the Offer.

• (h) The Offeror does not intend to exercise any right which may be available to it under the provisions of Section 102 or 103 of the Companies Act 1981 of Bermuda (as amended) to acquire compulsorily any Shares not acquired under the Offer after the Offer has closed but reserves the right to do so.

• (i) References to the Offer in this document and in the form of acceptance shall include any revision and/or extension thereof.

• (j) The making of the Offer to persons with a registered address in jurisdictions outside Hong Kong may be affected by the laws of the relevant jurisdictions. Shareholders who are citizens or residents or nationals of jurisdictions outside Hong Kong should inform themselves about and observe any applicable legal requirements. It is the responsibility of any such person who wishes to accept the Offer to satisfy himself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental or other consent which nay be required or the compliance with other necessary formalities and the payment of any transfer or other taxes due in respect of such jurisdiction.

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GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

• (a) The issue of this document has been approved by the directors of the Offeror.

• (b) This document includes particulars given in compliance with the Securities Ordinance (Chapter 333 of the Laws of Hong Kong) and the Takeovers Code for the purpose of giving information with regard to the Offeror and the Offer.

• (c) The directors of the Offeror jointly and severally accept full responsibility for the accuracy of the information contained in this document (other than those relating to the Group) and confirms, having made all reasonable enquires, that to the best of their knowledge and belief, opinions expressed in this document have been arrived at after due and careful consideration and there are no other facts (other than those relating to the Group) not contained in this document, the omission of which would make any statement in this document misleading.

• (d) The information relating to the Group included in this document has been provided by Ying Wing. The directors of Ying Wing jointly and severally accept full responsibility for the accuracy of the information contained in this document (other than those relating to the Offeror) and confirms, having made all reasonable enquires, that to the best of their knowledge and belief, there are no other facts (other than those relating to the Offeror) not contained in this document, the omission of which would make any statement in this document misleading.

2. MARKET PRICES

The table below shows the closing prices of the Shares quoted on the Stock Exchange on the last trading day for each of the six calendar months immediately preceding the Announcement, on the last trading day immediately preceding the Announcement and on the Latest Practicable Date:

Date	Closing price per	Share
		HK$
2001
31st July		1.80
31st August		1.55
28th September		1.10
31st October		1.10
30th November		1.10
31st December		1.10
2002
21st January (being the last trading day immediately preceding the Announcement)		1.10
Latest Practicable Date		0.50

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GENERAL INFORMATION

APPENDIX II

The highest and lowest closing price per Share recorded on the Stock Exchange during the Relevant Period were HK$1.80 on the trading days during the period from on 26th July, 2001 to 27th August, 2001 and HK$0.50 on 4th February, 2002 and 11th March, 2002 respectively.

3. DISCLOSURE OF INTERESTS

As at 12th March, 2002, the Offeror owned 148,000,000 Shares, representing 74.00% of the total issued share capital of Ying Wing. Save as aforesaid, none of the Offeror, the directors of the Offeror and any party acting in concert with any one of them owned or controlled any Shares as at 12th March, 2002.

4. DEALINGS IN SHARES

Save for the Sale Shares, none of the Offeror, its directors and any of the parties acting in concert with it owned any Shares, nor has any of them dealt in the Shares during the Relevant Period.

5. CONSENT

Kingsway Securities has given and has not withdrawn its written consent to the issue of this document with the inclusion herein of its letter and references to its name, in the form and context in which they appear herein.

6. GENERAL

• (a) As at the Latest Practicable Date, no person had any arrangement of the kind referred to in Note 8 of Rule 22 of the Takeovers Code with the Offeror or with any party acting in concert with the Offeror.

• (b) Kingsway Capital does not have any beneficial interest in the Shares and has not dealt in any Shares during the Relevant Period.

• (c) Kingsway Securities does not have any beneficial interest in the Shares and has not dealt in any Shares as principal during the Relevant Period. In addition, Kingsway Securities has not dealt in any Shares for any of its clients during the period from the date of the Announcement to the Latest Practicable Date.

• (d) There is no payment or other benefit to be made or given to any directors of Ying Wing or any of its subsidiary as compensation for loss of office or otherwise in connection with the Offer.

• (e) As at the Latest Practicable Date, there was no agreement or arrangement between the Offeror and any of the directors of Ying Wing or any other person which was conditional upon the outcome of the Offer or otherwise connected with the Offer.

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GENERAL INFORMATION

APPENDIX II

• (f) As at the Latest Practicable Date, there was no agreement, arrangement or understanding between the Offeror and any other persons for the transfer of the beneficial interests in Shares acquired by the Offeror under the Offer.

• (g) The registered office of the Offeror is at the offices of Imperial Trust Limited, Drake Chambers, P.O. Box 3387, Road Town, Tortola, British Virgin Islands. The principal place of business of the Offeror is at 2701 Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong.

• (h) The directors of the Offeror are Mr. Chau and Ms. Mo Yuk Ping.

• (i) As at the Latest Practicable Date, the Offeror, Kingsway Capital and Kingsway Securities were not aware of any persons who have irrecoverably committed themselves to accept or reject the Offer.

• (j) The address of Kingsway Capital, the financial adviser to the Offeror, is at 5/F., Hutchison House, 10 Harcourt Road, Central, Hong Kong.

• (k) The English text of this document and of the form of acceptance and transfer shall prevail over the Chinese text.

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