Rego Interactive Co., Ltd — Capital/Financing Update 2004

Oct 29, 2004

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.

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(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1065)

Resolutions passed at the Tenth Meeting of the Third Board of Directors and Announcement relating to the alteration to the capital increase agreement with respect to Tianjin Capital New Materials Company Limited

The Tenth Meeting of the Third Board of Directors of the Company was held on 28th October 2004. The Board is pleased to announce that on 28th October 2004, the Company entered into a supplemental agreement to the capital increase agreement with TSEC and Senyuan Technology, pursuant to which the registered capital of Capital Materials Company will be increased to RMB37.5 million. According to the supplemental agreement, the Company’s additional contribution of RMB17.5 million to the registered capital of Capital Materials Company remains unchanged, and TSEC and Senyuan Technology have waived their rights to make additional capital contribution. Following the completion of the supplemental agreement, the Company’s shareholding in Capital Materials Company will be increased to 70.67%.

Tianjin Capital Environmental Protection Company Limited (the “Company”) and all members of the board (the “Board”) of directors (the “Directors”) of the Company hereby warrant the truth, accuracy and completeness of the contents in this announcement, and accept joint responsibilities for any false information, misleading statement or material omission in this announcement.

The Tenth Meeting of the Third Board of Directors of the Company was held on 28th October 2004. The Third Quarterly Report 2004 of the Company to be published in the People’s Republic of China (the “PRC”) and overseas and the resolution relating to the alteration to the capital increase agreement of Tianjin Capital New Materials Company Limited ( ) (hereinafter referred to as “Capital Materials Company”) were considered and approved in the meeting.

It was approved and authorized by the Board that the Company will enter into a supplemental agreement to the capital increase agreement with Tianjin Sewage Engineering Company ( ) (hereinafter referred to as “TSEC”) and Tianjin Senyuan Technology Development Company Limited ( ) (hereinafter referred to as “Senyuan Technology”). According to the supplemental agreement, the Company’s contribution of Rmb 17.5 million to the capital increase of Capital Materials Company by way of cash remained unchange. However, Senyuan Technology and TSEC had waived their rights to make additional capital contribution. Upon completion of the capital increase, the registered capital of Capital Materials Company will be increased to Rmb 37.5 million. The Company

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had contributed, in aggregate, Rmb 26.5 million to the registered capital of Capital Materials Company, representing 70.67% of the registered capital after the capital increase, and is the controlling shareholder of Capital Materials Company. The contributions made by Senyuan Technology and TSEC to the registered capital of Capital Material Company were Rmb 4 million and Rmb 7 million, respectively, representing 10.66% and 18.67% of the registered capital after the capital increase.

Capital Materials Company is a joint venture company and was established by the Company, TSEC and Senyuan Technology in July 2003 in the PRC, with a registered capital of Rmb 20 million. The registered capital was contributed as to 45%, 35% and 20% by the Company, TSEC and Senyuan Technology respectively as at the date of establishment.

As disclosed in the announcement of the Company dated 8th July 2004, the Company entered into the capital increase agreement of Capital Materials Company with TSEC and Senyuan Technology on 8th July 2004. Pursuant to the capital increase agreement, the Company and Senyuan Technology agreed to contribute additional Rmb 17.5 million and Rmb 2.5 million to the proposed increase registered capital of Capital Materials Company respectively. The Company’s contribution shall be by way of cash, Senyuan Technology’s contribution shall be in the form of land use right of equivalent value, and TSEC voluntarily waived its right to make additional capital contribution to the registered capital of Capital Materials Company. According to the capital increase agreement, upon completion of the capital increase, the registered capital of Capital Materials Company will be increased from Rmb 20 million to Rmb 40 million. The Company will contribute Rmb 26.5 million in aggregate, representing 66.25% of the registered capital after the capital increase, and will be the controlling shareholder of Capital Materials Company. Senyuan Technology will contribute Rmb 6.5 million in aggregate, representing 16.25% of the registered capital after the capital increase. TSEC will contribute Rmb 7 million in aggregate, representing 17.25% of the registered capital after the capital increase.

As of the date of this announcement, the Company has fulfilled its obligation under the capital increase agreement and contributed Rmb 17.5 million to the registered capital of Capital Materials Company. However, Senyuan Technology is still not capable to complete the modification procedures of the land use right as contribution to the capital increase to Capital Materials Company. Furthermore, pursuant to the relevant provisions of Tianjin Land Administration Bureau, Senyuan Technology may not be able to complete such modification procedures of the land use right within a short period of time. As such, Senyuan Technology is not able to fulfill its obligations under the capital increase agreement to make additional contribution to the registered capital of Capital Materials Company.

The negotiation among the Company, Senyuan Technology and TSEC was on a fair and reasonable basis, after taking into account the prospect of Capital Materials Company, the Company’s contribution of Rmb 17.5 million to the capital increase by way of cash remained unchange. Senyuan Technology agreed to waive its right to make contribution to the capital increase. TSEC decided not to provide additional capital contribution. The Company considers that the absence of the land use right would have no significant impact to the operation of Capital Materials Company. After the entering into the supplemental agreement and upon completion of the amended terms of the capital increase, the registered capital of Capital Materials Company will be increased to Rmb 37.5 million.

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As TSEC and the Company are under the control of Tianjin Urban Engineering Bureau, the capital increase agreement together with the supplemental agreement constitutes a connected transaction of the Company under Chapter 14A of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”). As each of the percentage ratios of the capital increase by the Company under the capital increase agreement together with the supplemental agreement is less than 2.5%, approval from independent shareholders is not required pursuant to the provisions of the Listing Rules and the capital increase agreement together with the supplemental agreement are only subject to the reporting and announcement requirements set out in rules 14A.45 to 14A.47 of the Listing Rules.

Independent non-executive Directors considered that the connected transaction is in normal commercial terms and according to the wishes of all parties, and adequate disclosure has been and will be made pursuant to the relevant provisions of the Listing Rules. Interests of independent shareholders of the Company were protected. The terms of the supplemental agreement is fair and reasonable and is in the interest of the shareholders of the Company as a whole.

By Order of the Board Ma Baiyu Chairman

Tianjin, the PRC, 28th October 2004

As at the date of this announcement, the Board comprises executive Directors: Ms. Ma Baiyu, Mr. An Pindong, Mr. Gu Qifeng, Mr. Wang Zhanying, Mr. Tan Zhaofu and Ms. Fu Yana and independent non-executive Directors: Mr. Wang Xiangfei, Mr.Gao Zongze, and Mr. Ko Po Ming.

Please also refer to the published version of this announcement in The Standard.

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