RoboSense Technology Co., Ltd - Proxy Solicitation & Information Statement 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 licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Luoyang Glass Company Limited, you should at once hand this circular to the purchaser(s) or the transferee(s), or to the bank, licensed securities dealer or other agent through whom the sale or the transfer was effected for transmission to the purchaser(s) or the transferee(s).

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.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities.

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

(Stock Code: 1108)

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF A 50% EQUITY INTEREST IN LONGXIN GLASS

CONNECTED TRANSACTION DISPOSAL OF A 100% EQUITY INTEREST IN LOGISTICS COMPANY AND

NOTICE OF FOURTH EXTRAORDINARY GENERAL MEETING

Financial Adviser to the Company

KPMG Corporate Finance Limited

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

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A letter from the independent board committee of the Company is set out on pages 14 to 15 of this circular. A letter from Access Capital, the independent financial adviser, containing its advice to the independent board committee and the independent shareholders of the Company is set out on pages 16 to 27 of this circular.

A notice convening the EGM of the Company to be held at the conference room of the Company on 1st Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the People’s Republic of China at 9:00 a.m. on 18 December 2007 is set out on pages 38 to 40 of this circular. Whether or not you intend to attend the said meeting, you are requested to complete and return the accompanying proxy form in accordance with the instructions printed thereon. For holders of H Shares, the proxy form should be returned to the registrar of H Shares of the Company, HKSCC Registrars Limited at Rooms 1901-5, Hopewell Centre, 183 Queen’s Road East, Hong Kong or to the Company at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the People’s Republic of China as soon as possible and in any event not later than 24 hours before the time appointed for holding the EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting(s) should you so wish.

2 November 2007

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Longxin Glass Share Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Information relating to Longxin Glass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Reasons and Benefits of the Longxin Glass Share Transfer Agreement . . . . . . . . . . . . . . . . . . .	6
Financial Effects of the Longxin Glass Share Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . .	6
Information relating to the Company, CLFG and Listing Rules Implications . . . . . . . . . . . . . . .	7
Logistics Company Share Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Information relating to Logistics Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Reasons and Benefits of the Logistics Company Share Transfer Agreement
and Application of the Sale Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Financial Effects of the Logistics Company Share Transfer Agreement . . . . . . . . . . . . . . . . . . .	11
Listing Rules Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Procedure by which a Poll may be demanded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Letter from Access Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Appendix I — Independent Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
Appendix II — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38

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DEFINITIONS

In this circular, the following expressions shall have the meanings set out below unless the content requires otherwise:

“Access Capital”

Access Capital Limited, being a corporation licensed by the Securities and Futures Commission of Hong Kong for carrying Type 1 (dealing in securities), Type 4 (advising on securities) , Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in connection with the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement;

“Board”

the board of directors of the Company;

“Company”
Luoyang Glass Company Limited (洛陽玻璃股份有限公司), a joint stock limited company incorporated in the PRC with limited liability, the H Shares of which are listed on the Main Board of the Stock Exchange (stock code: 1108);
“CLFG” China Luoyang Float Glass (Group) Company Limited (中國洛陽浮法玻璃集團有限責任公司), a limited liability company incorporated in the PRC and the controlling shareholder of the Company holding a 35.8% equity interest in the Company;
“CNBMG” China National Building Material Group Corporation, a wholly Stateowned enterprise incorporated in the PRC and the ultimate controller of the Company;
“Directors” the directors of the Company, including the independent non-executive directors;
“EGM”
an extraordinary general meeting of the Company to be convened and held at the conference room of the Company on 1st Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC at 9:00 a.m. on 18 December 2007 for the Independent Shareholders to consider and, if thought fit, approve the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement;
“Group”

the Company and its subsidiaries;

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DEFINITIONS

“HK$” Hong Kong dollars, the lawful currency of Hong Kong; “Hong Kong” the Hong Kong Special Administrative Region of the PRC;

“Independent Shareholders” Shareholders other than CLFG and its associates;

“Independent Board Committee”

an independent board committee of the Company comprising of all the independent non-executive Directors, namely Mr. Zhang Zhanying, Mr. Guo Aimin, Mr. Xi Shengyang and Mr. Ge Tieming;

“Independent Third Party(ies)”
person(s) or company(ies) and their respective ultimate beneficial owner(s) which, to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, are third parties independent of the Company and connected persons of the Company (as defined in the Listing Rules);
“Latest Practicable Date”
31 October 2007, being the latest practicable date for the purpose of ascertaining certain information contained in this circular;
“Listing Rules”

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

“Longxin Glass”
洛玻集團洛陽龍新玻璃有限公司 (CLFG Luoyang Longxin Glass Company Limited*), a limited liability company incorporated in the PRC;
“Longxin Glass Share Transfer Agreement”
the share transfer agreement entered into between the Company and CLFG on 22 October 2007 in respect of the acquisition of a 50% equity interest in Longxin Glass by the Company from CLFG;
“Logistics Company” 洛陽洛玻倉儲物流有限公司 (Luoyang CLFG Storage and Logistics Company Limited*), a limited liability company incorporated in the PRC and a wholly-owned subsidiary of the Company;
“Logistics Company Share Transfer Agreement”

the share transfer agreement entered into between the Company and CLFG on 22 October 2007 in respect of the transfer of a 100% equity interest in Logistics Company from the Company to CLFG;

“percentage ratio”

has the meaning ascribed to this term under the Listing Rules, as application to a transaction;

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DEFINITIONS

“PRC”	the People’s Republic of China which, for the purpose of this circular,
	excludes Hong Kong and Macau and Taiwan;
“RMB”	Renminbi, the lawful currency of the PRC;
“SASAC”	The State-owned Assets Supervision and Administration Commission of
	the State Council of the PRC;
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Share(s)”	share(s) of RMB1.00 each of the Company;
“Shareholder(s)”	registered holder(s) of the Shares;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Xinan Fada”	新安縣發達建設投資有限公司(Xinan Fada Construction Investment
	Company Limited*), one of the two shareholders of Longxin Glass and an
	Independent Third Party;

* For identification purpose only

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LETTER FROM THE BOARD

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

(Stock Code: 1108)

Executive Directors: Mr. Zhu Leibo (Chairman) Mr. Zhu Liuxin Mr. Gao Tianbao Mr. Xie Jun Mr. Cao Mingchun

Registered office: No. 9 Tang Gong Zhong Lu Xigong District Luoyang Municipal Henan Province the People’s Republic of China

Non-executive Directors:

Mr. Yang Weiping Mr. Shen Anqin

Independent non-executive Directors:

Mr. Zhang Zhanying Mr. Guo Aimin Mr. Xi Shengyang Mr. Ge Tieming

2 November 2007

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF A 50% EQUITY INTEREST IN LONGXIN GLASS

CONNECTED TRANSACTION

DISPOSAL OF A 100% EQUITY INTEREST IN LOGISTICS COMPANY

INTRODUCTION

The 15th meeting of the 5th Board of the Company was held at the conference room of the Company at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang, Henan Province, the PRC at 10:00 a.m. on 22 October 2007. 11 out of the 11 eligible Directors attended the meeting. The purpose of the meeting was to discuss the entering

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LETTER FROM THE BOARD

into of two connected transaction agreements: (1) the acquisition of a 50% equity interest in Longxin Glass at a consideration of RMB35,000,000 and (2) the disposal of a 100% equity interest in Logistics Company at a consideration of RMB 70,363,714. The Directors, Mr. Zhu Leibo and Mr. Shen Anqin, have abstained from voting as Mr. Zhu is the general manager of CLFG and Mr. Shen is a director of CLFG. The remaining 9 Directors voted and approved unanimously the above two connected transaction agreements. Mr. Zhu Leibo, the Chairman of the Company, was authorised to sign these two agreements.

The Board believed that the acquisition of a 50% equity interest in Longxin Glass will result in the Company participating in the business of Longxin Glass directly and removing CLFG’s shareholding in Longxin Glass. The competing interest between CLFG and the Company will be eliminated. Further, in view of the comprehensive equipment and production lines of Longxin Glass, it will enhance the Group’s market position in the glass industry. Logistics Company holds cash and a piece of land. It has not carried out any operations. The disposal of Logistics Company represents a good opportunity for the Company to realise the land at a reasonable price and the proceeds obtained will improve the financial position and liquidity of the Company.

On 22 October 2007, the Company and CLFG entered into the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement. Under the Longxin Glass Share Transfer Agreement, the Company agreed to acquire a 50% equity interest in Longxin Glass from CLFG at a consideration of RMB35,000,000 (approximately HK$36,144,500). Pursuant to the Logistics Company Share Transfer Agreement, the Company agreed to sell a 100% equity interest in Logistics Company to CLFG at a consideration of RMB70,363,714 (approximately HK$72,664,607).

As CLFG is the controlling shareholder of the Company holding a 35.8% equity interest in the Company, the transactions contemplated under the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement constitute connected transactions of the Company under the Listing Rules and the Listing Rules of Shanghai Stock Exchange for Securities. According to the Listing Rules and Rule 10.25 of the Listing Rules of Shanghai Stock Exchange for Securities, each of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement will be subject to the Independent Shareholders’ approval at the EGM. Furthermore, each of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement is subject to the reporting and disclosure requirements, including the appointment of an independent financial adviser, under the Listing Rules. Further, as the relevant percentage ratios are more than 5% but less than 25%, the transaction contemplated under the Longxin Glass Share Transfer Agreement constitutes a discloseable transaction under Rule 14.06(2) of the Listing Rules.

The purpose of this circular is to give you, amongst other things, (i) further details of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement; (ii) the letter of advice from the Independent Board Committee to the Independent Shareholders; (iii) the letter of advice from Access Capital to the Independent Board Committee and the Independent Shareholders and (iii) a notice of EGM for the purpose of approving the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement and the transactions contemplated thereunder.

Set out below is a summary of the principal terms of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement.

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LETTER FROM THE BOARD

LONGXIN GLASS SHARE TRANSFER AGREEMENT

Date

22 October 2007

Parties

(A) CLFG:

the controlling shareholder of the Company holding a 35.8% equity interest in the Company, thus a connected person of the Company under the Listing Rules.

(B) Company

Details of the transaction

Upon completion of this transaction, the Company will own a 50% equity interest in Longxin Glass. The other 50% equity interest in Longxin Glass will continue to be owned by Xinan Fada, an Independent Third Party.

Consideration

The consideration amounting to RMB35,000,000 (equivalent to approximately HK$36,144,500) was determined by the Company and CLFG after arm’s length negotiations with reference to the audited net asset value of Longxin Glass as at 31 August 2007, the financial position of Longxin Glass, the economic benefits to the Company after completion of the transaction which will be further elaborated in the section “Reasons and benefits of the Longxin Glass Share Transfer Agreement” below, and the appraised value of approximately RMB80,755,000 by a PRC qualified surveyor, which is an independent third party to the Company and CLFG. The consideration of RMB35,000,000 represents a premium of approximately 4% of the attributable interest of Longxin Glass’ audited net asset value of approximately RMB33,536,000 as at 31 August 2007 and represents a discount of approximately 13% of the attributable appraised value of approximately RMB40,377,500.

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LETTER FROM THE BOARD

The PRC auditor of the Company, Guangdong Hengxin Delu Certified Public Accountants Company Limited has issued an auditors’ report on Longxin Glass with the following “Emphasis of Matters”:

“We would like to draw your attention that as mentioned in Note 2 to this report, the financial statement of Longxin Glass has been prepared on a going concern basis assuming that Longxin Glass will remain in business in the current and the next financial year. As at 31 August 2007, Longxin Glass had an accumulated loss of RMB25,628,000 and had an overdue current loan of RMB38,718,000. As at 31 August 2007, Longxin Glass’s current liabilities exceeded its current assets by RMB115,521,000. Longxin Glass has disclosed in Note 2 to this report its basis why this report should be prepared on a going concern basis notwithstanding the fundamental uncertainties underlying the going concern assumption. This paragraph does not affect our opinion on the financial statement of Longxin Glass.”

Note 2 to the above auditors’ report sets out the following:

“Notwithstanding that as at 31 August 2007, Longxin Glass had an accumulated loss of RMB25,628,000 and had an overdue current loan of RMB38,718,000 and Longxin Glass’s current liabilities exceeded its current assets by RMB115,521,000, the directors of Longxin Glass are of the opinion that Longxin Glass should continue as a going concern and repay its debts when they become due on the following basis:

(i) Longxin Glass has obtained consents from the relevant financial institutes to renew the revolving credit facilities with an aggregate credit limit of RMB29,000,000 upon expiry in the next financial year; and
(ii) Longxin Glass will continue to be supported financially by CLFG, the ultimate shareholder.

The directors of Longxin Glass are of the opinion that Longxin Glass will have adequate liquidity to meet its future working capital and other operational needs. Therefore, this report is prepared on a going concern basis.”

Upon fulfillment of the conditions set out below, the consideration of RMB35,000,000 will be paid by the Company on or before 31 December 2007.

Based on the above reasons and taking into account of the matters relating to “Emphasis of Matters” set out above, the Board considers that the consideration is fair and reasonable and in the interests of both the Company and the Shareholders.

The consideration will be funded by internal resources of the Company and will be satisfied by the Company wholly in cash. The Company is contemplating a disposal under the Logistics Company Share Transfer Agreement which will generate net proceeds of approximately RMB66,662,000 as further detailed below. These two agreements are not inter-conditional and even if the disposal of Logistics Company does not proceed, the Company has sufficient funds to satisfy the consideration for the Longxin Share Transfer Agreement out of its internal resources.

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LETTER FROM THE BOARD

Conditions Precedent

The Longxin Glass Share Transfer Agreement will become effective upon the fulfillment of the following conditions:-

the approval of the Longxin Glass Share Transfer Agreement by the Independent Shareholders at the EGM;
the approval of the Longxin Glass Share Transfer Agreement by the shareholders of Longxin Glass at the shareholders’ meeting;
Xinan Fada forfeits its pre-emption right to purchase shares in Longxin Glass; and
the obtaining of all necessary consents, authorisations and approvals from the relevant government authorities and in accordance with the articles of association of the Company and CLFG.

If the above conditions are not satisfied on or before 31 March 2008 or such later time as may be agreed between the Company and CLFG, the Longxin Glass Share Transfer Agreement shall cease and thereafter neither party shall have any obligations and liabilities towards each other thereunder.

Completion

Completion shall take place upon full payment of the consideration of RMB35,000,000 (equivalent to approximately HK$36,144,500) by the Company to CLFG and upon completion of the relevant registration procedure by Longxin Glass.

Currently the board of directors of Longxin Glass comprises of 7 directors, of whom 3 directors are nominated by CLFG and 4 directors are nominated by Xinan Fada. After completion, the Company will hold a 50% equity interest in Longxin Glass and CLFG will cease to hold any shares in Longxin Glass. The board composition of Longxin Glass will continue to comprise of 7 directors, of whom 3 directors shall be nominated by the Company and 4 directors shall be nominated by Xinan Fada. Longxin Glass will be equity accounted for as an associate of the Company.

INFORMATION RELATING TO LONGXIN GLASS

Longxin Glass was incorporated in the PRC in 2003. The registered capital of Longxin Glass is RMB88,000,000, of which CLFG and Xinan Fada each contributed 50%. Longxin Glass is principally engaged in the production and sale of float flat glass in the PRC.

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LETTER FROM THE BOARD

Set out below is the financial summary of Longxin Glass based on its financial statements prepared in accordance with the PRC Accounting Rules and Regulations:

	For the	For the	For the
	year ended	year ended	8 months ended
	31 December	31 December	31 August
	2005	2006	2007
	(RMB million)	(RMB million)	(RMB million)
	(Audited)	(Audited)	(Audited)
Net profit/(loss) before tax	9.2	(30.5)	9.6
Net profit/(loss) after tax	6.1	(30.5)	9.6
Total asset value	341.1	328.1	329.0
Net asset value	100.3	57.5	67.1

REASONS AND BENEFITS OF THE LONGXIN GLASS SHARE TRANSFER AGREEMENT

The Company is principally engaged in the production and sale of float flat glass and reprocessed automobile glass. Longxin Glass is engaged in a similar line of business. The acquisition of a 50% equity interest in Longxin Glass from CLFG will result in the Company participating in the business of Longxin Glass directly and removing CLFG’s shareholding in Longxin Glass. The competing interest between CLFG and the Company will be eliminated. Further, in view of the comprehensive equipment and production lines of Longxin Glass, it will enhance the Group’s market position in the glass industry.

In light of the basis of the consideration and the reasons and benefits resulting from the acquisition, the Directors consider that the transaction contemplated under the Longxin Glass Share Transfer Agreement is on normal commercial terms and is fair and reasonable and in the interests of both the Company and its Shareholders.

FINANCIAL EFFECTS OF THE LONGXIN GLASS SHARE TRANSFER AGREEMENT

Effect on earnings

Longxin Glass’s audited profit after taxation amounted to approximately RMB9.6 million (approximately HK$9.9 million) for the eight months ended 31 August 2007.

Upon completion of the Longxin Glass Share Transfer Agreement, Longxin Glass will be equity accounted for as an associate of the Company. Assuming the Longxin Glass Share Transfer Agreement is approved by the Independent Shareholders at the EGM on 18 December 2007 and completion takes place on or before 31 December 2007, the Board expects that the contribution from Longxin Glass on the Group’s earnings for the year ending 31 December 2007 will be positive and immaterial.

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LETTER FROM THE BOARD

Effect on assets and liabilities

Since the consideration will be satisfied by internal resources of the Group, the Board expects that there will be no material effect on the consolidated total assets, total liabilities and net asset value of the Group upon completion of the Longxin Glass Share Transfer Agreement although the Group’s cash and cash equivalent balances will be decreased to the extent of the consideration of RMB35,000,000.

After completion of the Longxin Glass Share Transfer Agreement, the Company’s 50% equity interest in Longxin Glass will be equity accounted for and will be represented by a separate item under “Interest in associate(s)” in the Company’s consolidated balance sheet. Therefore, there is no impact on the total liabilities of the Group as a result of the completion of the transaction contemplated under the Longxin Glass Share Transfer Agreement.

The consideration represents approximately a 4% premium over the audited net asset value of the attributable interest in Longxin Glass and the Company will only account for 50% of Longxin Glass’ net asset value in the Company’s consolidated balance sheet.

INFORMATION RELATING TO THE COMPANY, CLFG AND LISTING RULES IMPLICATIONS

The Company is principally engaged in the production and the sale of float flat glass and reprocessed automobile glass. CNBMG, the ultimate controller of the Company, is a key state owned enterprise directly under the management of SASAC. SASAC is the controlling shareholder and ultimate controller of CNBMG. The principal operations of CNBMG include research and development, wholesale and retail of building materials (including steel products and timber, but only limited to procurement and supply to the direct enterprises units under its system), auxiliary raw materials and production technology equipments, supply of small cars under the plan of its system; contraction of design and construction of new-model building material houses, factories and ornament and decoration engineering.

CLFG is a limited liability company with registered capital of RMB1,286,740,000. Its office address is No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang, Henan Province, the PRC and its legal representative is Mr. Liu Baoying. CLFG is principally engaged in the production of glass, related raw materials and equipment, import, export and domestic sales of glass, processing technology, design and sub-contracting of engineering works, labour export, provision of industrial production material (excluding those under control of the state), technological services, consultation services and goods transportation. The audited net loss and net assets of CLFG in 2006 are approximately RMB217,429,000 and approximately RMB 869,029,000 respectively.

As CLFG is a controlling shareholder of the Company holding a 35.8% equity interest in the Company, CLFG is a connected person of the Company. The transaction contemplated under the Longxin Glass Share Transfer Agreement constitutes a connected transaction on the part of the Company under Chapter 14A of the Listing Rules and the Listing Rules of Shanghai Stock Exchange for Securities. According to the Listing Rules and Rule 10.25 of the Listing Rules of Shanghai Stock Exchange for Securities, the Longxin Glass Share Transfer Agreement will be subject to the Independent Shareholders’ approval at the EGM.

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LETTER FROM THE BOARD

Further, as the relevant percentage ratios are more than 5% but less than 25%, the transaction contemplated under the Longxin Glass Share Transfer Agreement constitutes a discloseable transaction under Rule 14.06(2) of the Listing Rules.

There is no present intention to further increase the Company’s shareholding in Longxin Glass after completion of the Longxin Glass Share Transfer Agreement. The Company will comply with the Listing Rules as and when any further change of its interest in Longxin Glass may occur.

LOGISTICS COMPANY SHARE TRANSFER AGREEMENT

Date

22 October 2007

Parties

(A) Company
(B) CLFG:
the controlling shareholder of the Company holding a 35.8% equity interest in the Company, thus a connected person of the Company under the Listing Rules.

Details of the transaction

Upon completion of this transaction, the Company will have no interest in Logistics Company and Logistics Company will no longer be a subsidiary of the Company.

Consideration

The consideration amounting to RMB70,363,714 (equivalent to approximately HK$72,664,607) was determined by the Company and CLFG after arm’s length negotiations with reference to Logistics Company’s audited net asset value. The consideration of RMB70,363,714 represents a premium of approximately 0.02% of the Logistics Company’s audited net asset value of RMB 70,351,000 as at 19 October 2007.

Upon fulfillment of the conditions set out below, 30% of the consideration of RMB70,363,714 (i.e. RMB21,109,114.2) will be paid by CLFG on or before 31 December 2007 and the remaining 70% of the consideration (i.e. RMB49,254,599.8 ) will be paid by CLFG on or before 20 April 2008.

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LETTER FROM THE BOARD

Based on the above reasons, the Board considers that the consideration is fair and reasonable and in the interests of both the Company and the Shareholders.

The Company has been informed that CLFG will fund the acquisition of Logistics Company by way of the following:-

a. loan facilities provided by financial institutions;
b. conversion of current assets into cash (including land, shares and other assets); and
c. financial assistance from CNBMG.

Conditions precedent

The Logistics Company Share Transfer Agreement will become effective upon the fulfilment of the following conditions:-

the approval of the Logistics Company Share Transfer Agreement by the Independent Shareholders at the EGM; and
the obtaining of all necessary consents, authorisations and approvals from the relevant government authorities and in accordance with the articles of association of the Company and CLFG.

If the above conditions are not satisfied on or before 31 March 2008 or such later time as may be agreed between the Company and CLFG, the Logistics Company Share Transfer Agreement shall cease and thereafter neither party shall have any obligations and liabilities towards each other thereunder.

Completion

Completion shall take place upon full payment of the consideration of RMB70,363,714 (equivalent to approximately HK$72,664,607) by CLFG and upon completion of the relevant registration procedure by Logistics Company.

After completion, the Company will cease to hold any interest in Logistics Company and Logistics Company will no longer be a subsidiary of the Company.

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LETTER FROM THE BOARD

INFORMATION RELATING TO LOGISTICS COMPANY

Logistics Company was incorporated in the PRC on 14 October 2007 and is decided to engage in warehousing storage (excluding dangerous goods), allocation and transportation of goods, logistics information services, consultation of logistic system design, consultation services of glass processing technology, sale of glass and related raw materials, steels, building materials and metals in the PRC. The registered capital of Logistics Company is RMB10,000,000. As at the Latest Practicable Date, Logistics Company holds cash and a piece of land (“Land”). The Land occupies an area of approximately 8.0 hectares located to the east of the Company’s factory area.

In preparation of the incorporation of the Logistics Company, the Company has commissioned an independent appraisal of the Land which valued the land at RMB67,363,714 on 8 October 2007. Under a separate audit work performed on Logistics Company prepared under the PRC Accounting Rules and Regulations, as at 19 October 2007, the audited net asset value of Logistics Company was RMB70,351,000.

REASONS AND BENEFITS OF THE LOGISTICS COMPANY SHARE TRANSFER AGREEMENT AND APPLICATION OF THE SALE PROCEEDS

As mentioned above, Logistics Company holds cash and the Land only. The Logistics Company is newly set up and has not carried out any operations. The Company does not have any specific plan regarding the Land. After due and careful consideration, the Directors believe that the disposal of Logistics Company represents a good opportunity for the Company to realise the Land at a reasonable price and the proceeds obtained will enhance the financial position and liquidity of the Company.

The Land was acquired by the Company in 1994 at approximately RMB17,697,000 and its carrying value was approximately RMB12,978,000 as at 31 August 2007. The Company’s total cost of investment in Logistics Company is approximately RMB15,978,000 comprising RMB3,000,000 cash and the Land. Upon disposal of Logistics Company, the Company will realise a gain of approximately RMB50,685,000, which is the difference between the consideration of RMB70,363,714 and the total of the Company’s total investment cost of approximately RMB15,978,000, business tax of approximately RMB2,991,000 (being 5.5% of the gross gain of RMB54,385,714) and a transaction levy of approximately RMB710,000. Given Logistics Company was established on 14 October 2007 and has no and will not have any operation by year end, the investment in Logistics Company by year end will only reflect the cost of investment of approximately RMB15,978,000 in the financial statements as at 31 December 2007. Accordingly, in the event that completion of the Logistics Company Share Transfer Agreement takes place in 2007, such gain on disposal of approximately RMB50,685,000 will be reflected in the financial statements of the Company for the year ending 31 December 2007. The auditors of the Company has verbally confirmed that the calculation and the accounting treatment of the gain on disposal of approximately RMB50,685,000 are acceptable under International Financial Reporting Standards.

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LETTER FROM THE BOARD

Given the reasons mentioned above, the Directors consider that the transaction contemplated under the Logistics Company Share Transfer Agreement is on normal commercial terms and is fair and reasonable and in the interests of both the Company and its Shareholders.

The disposal of Logistics Company will generate net proceeds of approximately RMB66,662,000, of which RMB35,000,000 will be used to fund the consideration of the transaction under the Longxin Glass Share Transfer Agreement as mentioned above and the balance will be used to expand the general working capital and production capacity of the Group. The Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement are not inter-conditional and even if the disposal of Logistics Company does not proceed, the Company has sufficient funds to satisfy the consideration for the Longxin Glass Share Transfer Agreement out of its internal resources. In the event that the Longxin Glass Share Transfer Agreement does not proceed, all proceeds generated from the disposal of Logistics Company will be used as general working capital of the Group.

FINANCIAL EFFECTS OF THE LOGISTICS COMPANY SHARE TRANSFER AGREEMENT

Effect on earnings

As Logistics Company holds cash and the Land only and has not carried out any operations, there will be no impact on the earnings of the Group upon completion of the Logistics Company Share Transfer Agreement except for a gain on disposal of approximately RMB50,685,000 to be recognised by the Group.

Effect on assets and liabilities

The expected recognition of the gain on disposal of approximately RMB50,685,000 would have positive effects on the total asset and the net asset value of the Group. The disposal of Logistics Company will generate net proceeds of approximately RMB66,662,000 and accordingly the Group’s cash and cash equivalent balances will increase by the same amount.

LISTING RULES IMPLICATIONS

As CLFG is a controlling shareholder of the Company holding a 35.8% equity interest in the Company, CLFG is a connected person of the Company. The transaction contemplated under the Logistics Company Share Transfer Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and the Listing Rules of Shanghai Stock Exchange for Securities. According to the Listing Rules and Rule 10.25 of the Listing Rules of Shanghai Stock Exchange for Securities, the Logistics Company Share Transfer Agreement will be subject to the Independent Shareholders’ approval at the EGM.

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LETTER FROM THE BOARD

EGM

The EGM will be held at the conference room of the Company on 1st Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC at 9:00 a.m. on 18 December 2007 for the purpose of seeking Independent Shareholders’ approval on the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement and the transactions contemplated thereunder. According to the Listing Rules, CLFG, the controlling shareholder of the Company holding a 35.8% equity interest in the Company, and its associates will abstain from voting in respect of the resolutions relating to the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement. The votes to be taken at the EGM in relation to the said resolutions will be taken by poll. A notice of the EGM is set out on pages 38 to 40 of this circular.

A form of proxy for use at the EGM is enclosed. Whether or not you are able to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s share registrar, HKSCC Registrars Limited at Rooms 1901-5, Hopewell Centre, 183 Queen’s Road East, Hong Kong or to the Company at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC as soon as possible and in any event not later than 24 hours before the time appointed for holding the EGM or for any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM or any adjourned meeting should you so wish.

PROCEDURE BY WHICH A POLL MAY BE DEMANDED

Pursuant to Article 99 of the Articles of Association of the Company, at any general meeting, a resolution put to vote shall be voted by show of hands unless a poll is demanded by the following person before or after any vote by show of hands:

(1) the chairman of the meeting;
(2) at least two shareholders entitled to vote present in person or by proxy; or
(3) one or more shareholders present in person or by proxy representing in aggregate 10% or more of all shares carrying the right to vote at the meeting.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors consider that the terms of each of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement are fair and reasonable to the Company and in the interests of its Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM for approving the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement and the transactions contemplated thereunder.

Your attention is also drawn to the letter from the Independent Board Committee set out on pages 14 and 15 of this circular and the letter of advice from Access Capital to the Independent Board Committee and the Independent Shareholders set out on pages 16 and 27 of this circular in connection with the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement and the principal factors and reasons considered by them in arriving at their advice.

The Independent Board Committee, having taken into account the advice from Access Capital, the independent financial adviser, considers that the terms of each of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement are fair and reasonable and in the interest of the Company and its Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM for approving these two transactions.

ADDITIONAL INFORMATION

Your attention is drawn to the general information set out in Appendix II to this Circular.

Yours faithfully, For and on behalf of the Board Luoyang Glass Company Limited Zhu Leibo Chairman

Note: In this circular, certain amounts expressed in RMB have been translated into HK$ at RMB1=HK$1.0327 for illustrative purposes only. No representation is made that any amount in HK$ or RMB could have been or can be converted at the above rates or at any other rates.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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

(Stock Code: 1108)

2 November 2007

To the Independent Shareholders

Dear Sir/Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF A 50% EQUITY INTEREST IN LONGXIN GLASS

CONNECTED TRANSACTION

DISPOSAL OF A 100% EQUITY INTEREST IN LOGISTICS COMPANY

We refer to the circular dated 2 November 2007 of the Company (the “Circular”) of which this letter forms part. Terms defined in the Circular shall have the same meanings herein unless the context otherwise requires.

We have been appointed to form the Independent Board Committee to consider and to advise the Independent Shareholders as to whether, in our opinion, the terms of each of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement are fair and reasonable so far as the Independent Shareholders are concerned. Access Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of each of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement.

We wish to draw your attention to the “Letter from the Board” set out on pages 1 to 13 of the Circular which contains, inter alia, information of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement, as well as the letter from Access Capital set out on pages 16 to 27 of the Circular which contains its advice in respect of the terms of each of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the advice of Access Capital, we consider that the terms of each of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Independent Shareholders as a whole to enter into the same. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM in respect of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement.

Yours faithfully, For and on behalf of Independent Board Committee

Luoyang Glass Company Limited

Mr. Zhang Zhanying Mr. Guo Aimin Mr. Xi Shengyang Mr. Ge Tieming

Independent non-executive Directors

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LETTER FROM ACCESS CAPITAL

The following is the full text of the letter of advice to the Independent Board Committee and the Independent Shareholders from Access Capital prepared for the purpose of incorporation in this circular.

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Suite 606, 6th Floor Bank of America Tower 12 Harcourt Road Central Hong Kong

2 November 2007

To: The Independent Board Committee and the Independent Shareholders of Luoyang Glass Company Limited

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF A 50% EQUITY INTEREST IN LONGXIN GLASS

AND

CONNECTED TRANSACTION DISPOSAL OF A 100% EQUITY INTEREST IN LOGISTICS COMPANY

I. INTRODUCTION

We refer to our appointment as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders with regard to (i) the terms of the Longxin Glass Share Transfer Agreement; and (ii) the terms of the Logistics Company Share Transfer Agreement. Details of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement (the “Transactions”) are contained in the “Letter from the Board” of the circular to the Shareholders dated 2 November 2007 (the “Circular”), of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise specifies.

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LETTER FROM ACCESS CAPITAL

On 22 October 2007, the Company and CLFG entered into the Longxin Glass Share Transfer Agreement pursuant to which, the Company agreed to acquire a 50% equity interest in Longxin Glass held by CLFG at a consideration of RMB35,000,000 (approximately HK$36,144,500). On the same date, the Company entered into the Logistics Company Share Transfer Agreement with CLFG for the disposal of a 100% equity interest in Logistics Company held by the Company to CLFG at a consideration of RMB70,363,714 (approximately HK$72,664,607).

As CLFG is the controlling shareholder of the Company, the transactions contemplated under the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement constitute connected transactions of the Company under the Listing Rules and the Listing Rules of Shanghai Stock Exchange for Securities. According to the Listing Rules and Rule 10.25 of the Listing Rules of Shanghai Stock Exchange for Securities, each of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement will be subject to the Independent Shareholders’ approval at the EGM. Furthermore, the Transactions are subject to the reporting and disclosure requirements, including the appointment an independent financial adviser, under the Listing Rules. Further, as the relevant percentage ratios are more than 5% but less than 25%, the transaction contemplated under the Longxin Glass Share Transfer Agreement constitutes a discloseable transaction under Rule 14.06(2) of the Listing Rules.

As at the Latest Practicable Date, CLFG, the controlling shareholder of the Company holding a 35.8% equity interest in the Company, and its associates will abstain from voting in respect of the resolutions relating to the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement. The votes to be taken at the EGM in relation to the said resolutions will be taken by poll.

II. THE INDEPENDENT BOARD COMMITTEE

The Board currently consists of five executive Directors, namely Mr. Zhu Leibo, Mr. Zhu Liuxin, Mr. Gao Tianbao, Mr. Xie Jun and Mr. Cao Mingchun, two non-executive Directors, Mr. Yang Weiping and Mr. Shen Anqin, and four independent non-executive Directors, namely Mr. Zhang Zhanying, Mr. Guo Aimin, Mr. Xi Shengyang and Mr. Ge Tieming.

We have been appointed to advise the Independent Board Committee and the Independent Shareholders as to whether the respective terms of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement were agreed on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole and to give our opinion in relation to the respective terms of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement for their consideration when making their recommendation to the Independent Shareholders.

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LETTER FROM ACCESS CAPITAL

III. BASIS AND ASSUMPTIONS OF THE ADVICE

In formulating our advice, we have relied solely on the statements, information, opinions and representations for matters relating to the Group contained in the Circular and the information and representations provided to us by the Company and/or its senior management staff and/or the Directors. We have assumed that all such statements, information, opinions and representations for matters relating to the Group contained or referred to in the Circular or otherwise provided or made or given by the Company and/or its senior management staff and/or the Directors and for which it is/they are solely responsible were true and accurate and valid at the time they were made and given and continue to be true and valid as at the date of the Circular. We have assumed that all the opinions and representations for matters relating to the Group made or provided by the Directors and/or the senior management staff of the Company contained in the Circular have been reasonably made after due and careful enquiry. We have also sought and obtained confirmation from the Company and/or its senior management staff and/or the Directors that no material facts have been omitted from the information provided and referred to in the Circular.

We consider that we have reviewed all currently available information and documents which are available to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our opinions. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions and representations provided to us by the Company and/or its senior management staff and/or the Directors and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents. We have not, however, carried out an independent verification of the information provided, nor have we conducted an independent investigation into the business and affairs of the Company or any of its subsidiaries.

IV. PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our recommendation, we have taken into consideration the following principal factors and reasons:

1. Background of the Group

1.1 Principal business of the Group

The Group is a principally engaged in the production and sales of float flat glass and reprocessed automobile glass.

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LETTER FROM ACCESS CAPITAL

1.2 Financial performance of the Group

As stated in the Group’s 2006 annual report, the Group achieved audited consolidated income from principal operations of approximately RMB1,195.9 million (approximately HK$1,235.0 million) and a net loss of approximately RMB317.5 million (approximately HK$327.9 million) for the year ended 31 December 2006 prepared under the PRC Accounting Rules and Regulations, as compared to an audited consolidated income from principal operations of approximately RMB1,031.9 million (approximately HK$1,065.6 million) and a net profit for the year of approximately RMB4.9 million (approximately HK$5.1 million) for the year ended 31 December 2005.

As stated in Company’s 2006 annual report, the Group’s profitability was adversely impacted due to the over repaid growth of new capacities in the industry, the imbalanced supply and demand of glass and the intensified disordered market competition, which stood in contrast to the high prices of production materials leading to rising costs of production and declining selling prices. Overall, the average sales price of the Group’s float glass products has decreased by approximately 8.8% as compared to that for the year ended 31 December 2005 and coupled with the increase in the average cost of sales. During the year, the Group continued its efforts to adopt other production materials with lower costs and to develop new material which will cause a higher profit margin.

Shareholders should note that there are significant differences, including but not limited to the differences on “reversal of impairment losses on receivables”, “unrecognized loss from subsidiaries” and “difference in accounting for reused packing materials”, between the financial statements of the Group prepared in accordance with the PRC Accounting Rules and Regulations and International Financial Reporting Standards (“IFRSs”). Details of the reconciliation of the (loss)/profit attributable to the Group prepared in accordance with the PRC Accounting Rules and Regulations and IFRSs are set out in under the heading “Significant differences between the financial statements of the Group prepared in accordance with the PRC Accounting Rules and Regulations and International Financial Reporting Standards (“IFRSs”)” in the Group’s 2006 annual report. To be consistent with the management discussion and analysis section as stated in the Group’s 2006 annual report, we have also used the financial information based on PRC Accounting Rules and Regulations for our analysis in this section.

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LETTER FROM ACCESS CAPITAL

As stated in the interim report of the Group for the six months ended 30 June 2007, the Group recorded an unaudited operating income of approximately RMB689.8 million (approximately HK$712.4 million) and an unaudited net loss attributable to parent company’s shareholders of approximately RMB63.9 million (approximately HK$66.0 million) for the six months ended 30 June 2007 prepared under the PRC Accounting Rules and Regulations, as compared to the unaudited operating income of approximately RMB474.9 million (approximately HK$490.4 million), representing an increase of approximately 45.2% and an unaudited net loss attributable to parent company’s shareholders of approximately RMB156.8 million (approximately HK$161.9 million) for the six months ended 30 June 2006. For the six months ended 30 June 2007, the Group’s financial position improved with gross profit of approximately RMB40.5 million (approximately HK$41.8 million) compared to the gross loss of approximately RMB64.3 million (approximately HK$66.4 million) for the six months ended 30 June 2006.

As explained in the abovementioned interim report of the Group, despite the Group still recorded a net loss over the period due to various reasons including but not limited to the overtly large scale and rapid investment in the past coupled with shortage of capital and market change, the Group’s operating result has been significantly improved over the same period which was mainly attributable to the increase in both sales and selling price, effective control on cost, thus, the improvement in gross profit margin.

As stated in the announcement of the Company dated 25 October 2007, the Group recorded an unaudited operating income of approximately RMB416.2 million (approximately HK$429.8 million) and an unaudited net profit attributable to parent company’s shareholders of the Company of approximately RMB383,000 (approximately HK$395,500) for the nine months ended 30 September 2007 as compared to the unaudited operating income of approximately RMB317.5 million (approximately HK$327.9 million) and an unaudited net loss attributable to parent company’s shareholders of the Company of approximately RMB64.0 million (approximately HK$66.1 million) for the same period in 2006.

In August 2007, the PRC National Development and Reform Commission (“NDRC”) issued the “Elimination of existing small and low production capacity of float glass manufactures” (“做好淘汰落後平板玻璃生產能力有關工作的通知”). Such document reiterated the existing policy on float glass industry and to eliminate the small and low production capacity of float glass manufactures during the “Eleventh-five period” and to promote healthy development of the float glass industry. Since the situation of industry oversupply will be improved in the year 2007 due to the implementation of the aforesaid policy, the Directors believe that the overall glass business environment has improved when compared to the financial year ended 31 December 2006. In addition, the principal activities of the Company are mainly in manufacture and sales of float sheet glass, despite the short term negative impact to the float glass industry, the Directors expect that steady development of the PRC float glass industry in the future would in turn ensure a steady demand for float glass.

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LETTER FROM ACCESS CAPITAL

Taking into account that (i) the float glass industry in the PRC has gone through a period of cyclical downturn which, in turn, has accelerated the consolidation trend in the float glass industry in the PRC, with the elimination of certain smaller manufacturers; and (ii) the success of the Group’s initiative on improvement for profitability by adopting other production materials with lower costs and developing new material, we are of the view that the transaction contemplated under the Longxin Glass Share Transfer Agreement is in line with the Group’s corporate strategy and NDRC’s policy to capture a larger share of the anticipated increase in float glass demand in the future.

2. The Longxin Glass Share Transfer Agreement

2.1 The terms of Longxin Glass Share Transfer Agreement

Pursuant to the Longxin Glass Share Transfer Agreement, CLFG has agreed to sell its 50% equity interest in Longxin Glass to the Company at a consideration of RMB35,000,000 (approximately HK$36,144,500), which is to be satisfied by the Company wholly in cash. Upon completion of this transaction, the Company will own a 50% equity interest in Longxin Glass. The other 50% equity interest in Longxin Glass will continue to be owned by Xinan Fada, an Independent Third Party.

2.2 Consideration

The consideration amounting to RMB35,000,000 (equivalent to approximately HK$36,144,500) was determined by the Company and CLFG after arm’s length negotiations with reference to the audited net asset value of Longxin Glass as at 31 August 2007, the financial position of Longxin Glass, the economic benefits to the Company after completion of the transaction which will be further elaborated in the section “Reasons for and benefits to the transaction with respect to Longxin Glass Share Transfer Agreement” below in this letter, and the appraised value of approximately RMB80,755,000 as at 19 October 2007 by a PRC qualified surveyor, which is an independent third party to the Company and CLFG. The consideration of RMB35,000,000 represents a premium of approximately 4% of the attributable interest of Longxin Glass’ audited net asset value of approximately RMB33,536,000 as at 31 August 2007 and represents a discount of 13% of the attributable appraised value of approximately RMB40,377,500.

Upon fulfillment of the conditions set out in the “Letter from the Board”, the consideration of RMB35,000,000 will be paid by the Company on or before 31 December 2007.

Based on the above reasons, the Board considers that the consideration is fair and reasonable and in the interests of both the Company and the Shareholders.

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LETTER FROM ACCESS CAPITAL

Taking into account that (i) the consideration represented a slight premium to the attributable interests of Longxin Glass’s audited net asset value and a discount to the appraised value issued by the independent valuer; (ii) the historical financial performance of Longxin Glass, in particular, the turnaround of Longxin Glass to profitability for the eight months ended 31 August 2007; and (iii) the reasons for and benefits to the transaction under the Longxin Glass Share Transfer Agreement set out as below in this letter, we are of the view that the consideration payable by the Company under the Longxin Glass Share Transfer Agreement is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

2.3 Information relating to Longxin Glass

Set out below is the financial summary of Longxin Glass based on its financial statements prepared in accordance with the PRC Accounting Rules and Regulations:

	For the	For the	For the
	year ended	year ended	8 months ended
	31 December	31 December	31 August
	2005	2006	2007
	(RMB million)	(RMB million)	(RMB million)
	(Audited)	(Audited)	(Audited)
Net profit/(loss) before tax	9.2	(30.5)	9.6
Net profit/(loss) after tax	6.1	(30.5)	9.6
Total asset value	341.1	328.1	329.0
Net asset value	100.3	57.5	67.1

2.4 Reasons for and benefits to the transaction with respect to Longxin Glass Share Transfer Agreement

As stated in the “Letter from the Board”, the Company is principally engaged in the production and sale of float flat glass and reprocessed automobile glass. Longxin Glass is engaged in a similar line of business. The acquisition of a 50% equity interest in Longxin Glass from CLFG will result in the Company participating in the business of Longxin Glass directly and removing CLFG’s shareholding in Longxin Glass. The competing interest between CLFG and the Company will be eliminated. Further, in view of the comprehensive equipment and production lines of Longxin Glass, it will enhance the Group’s market position in the glass industry.

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LETTER FROM ACCESS CAPITAL

Taking into account the background to, and reasons for, the transaction contemplated under Longxin Glass Share Transfer Agreement is consistent with the Group’s corporate strategy to capture a larger share of the anticipated increase in float glass demand in the future, we concur with the Directors’ view that the transaction contemplated under Longxin Glass Share Transfer Agreement is on normal commercial terms and in the interests of both the Company and the Shareholders.

2.5 Expect financial impact on the Group as the result of the transaction contemplated under Longxin Glass Share Transfer Agreement
2.5.1 Total assets, total liabilities and net asset value

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LETTER FROM ACCESS CAPITAL

2.5.2 Earnings

Longxin Glass’s audited profit after taxation amounted to approximately RMB9.6 million (approximately HK$9.9 million) for the eight months ended 31 August 2007.

2.5.3 Effects on the cash position/gearing of the Group

As stated in the “Letter from the Board”, the consideration for the transaction contemplated under Longxin Glass Share Transfer Agreement will be satisfied by internal resources of the Group. Hence, the “Cash and cash equivalent” classified under current assets of the consolidated balance sheet of the Group will decrease to extent of the consideration of RMB35,000,000.

As the consideration will be settled by internal resources of the Group, it is expected to have no significant impact on the gearing ratio as result of the tranasction.

3. The Logistics Company Share Transfer Agreement

3.1 The terms of Logistics Company Share Transfer Agreement

Pursuant to the Logistics Company Share Transfer Agreement, the Company has agreed to transfer all of its 100% equity interest in Logistics Company to CLFG at a consideration of RMB70,363,714 (approximately HK$72,664,607), which is to be satisfied by CLFG wholly in cash. Upon completion of this transaction, the Company will have no interest in Logistics Company and Logistics Company will no longer be a subsidiary of the Company.

3.2 Consideration

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LETTER FROM ACCESS CAPITAL

Upon fulfillment of the conditions set out in the “Letter from the Board”, 30% of the consideration of RMB70,363,714 (i.e. RMB21,109,114.2) will be paid by CLFG on or before 31 December 2007 and the remaining 70% of the consideration (i.e. RMB49,254,599.8) will be paid by CLFG on or before 20 April 2008.

Based on the reasons as stated in the “Letter from the Board”, the Board considers that the consideration is fair and reasonable and in the interests of both the Company and the Shareholders.

The Company has been informed that CLFG will fund the acquisition of Logistics Company by way of the following:

a. loan facilities provided by financial institutions;
b. conversion of current assets into cash (including land, shares and other assets); and
c. financial assistantce from CNBMG.

3.3 Information relating to Logistics Company

Logistics Company was incorporated in the PRC on 14 October 2007 and is decided to engage in warehousing storage (excluding dangerous goods), allocation and transportation of goods, logistics information services, consultation of logistic system design, consultation services of glass processing technology, sales of glass and related raw materials, steels, building materials and metals in the PRC. The registered capital of Logistics Company is RMB10,000,000. As at the Latest Practicable Date, Logistics Company holds cash and a piece of land (“Land”). The Land occupies an area of approximately 8.0 hectares located to the east of the Company’s factory area.

3.4 Reasons and benefits of the Logistics Company Share Transfer Agreement and application of the sale proceeds

As mentioned in the “Letter from the Board”, Logistics Company holds cash and the Land only. The Logistics Company is newly set up and has not carried out any operations. The Company does not have any specific plan regarding the Land. After due and careful consideration, the Directors believe that the disposal of Logistics Company represents a good opportunity for the Company to realise the Land at a reasonable price and the proceeds obtained will enhance the financial position and liquidity of the Company.

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LETTER FROM ACCESS CAPITAL

The Land was acquired by the Company in 1994 at approximately RMB17,697,000 and its carrying value was approximately RMB12,978,000 as at 31 August 2007. The Company’s total cost of investment in Logistics Company is approximately RMB15,978,000 comprising RMB3,000,000 cash and the Land. Upon disposal of Logistics Company, the Company will realise a gain of approximately RMB50,685,000, which is the difference between the consideration of RMB70,363,714 and the Company’s total investment cost of approximately RMB15,978,000, business tax of approximately RMB2,991,000 (being 5.5% of the gross gain of RMB54,385,714) and a transaction levy of approximately RMB710,000. Given Logistics Company was established on 14 October 2007 and has no and will not have any operation by year end, the investment in Logistics Company by year end will only reflect the cost of investment of approximately RMB15,978,000 in the financial statements as at 31 December 2007. Accordingly, in the event that completion of the Logistics Company Share Transfer Agreement takes place in 2007, such gain on disposal of approximately RMB50,685,000 will be reflected in the financial statements of the Company for the year ending 31 December 2007. The auditors of the Company have verbally confirmed that the calculation and the accounting treatment of the gain on disposal of approximately RMB50,685,000 are acceptable under IFRSs.

The disposal of Logistics Company will generate net proceeds of approximately RMB66,662,000, of which RMB35,000,000, will be used to fund the consideration of the transaction under the Longxin Glass Share Transfer Agreement as mentioned above and the balance will be used to expand the general working capital and production capacity of the Group. The Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement are not inter-conditional and even if the disposal of Logistics Company does not proceed, the Company has sufficient funds to satisfy the consideration for the Longxin Share Transfer Agreement out of its internal resources. In the event that the Longxin Share Transfer Agreement does not proceed, all proceeds generated from the disposal of Logistics Company will be used as the general working capital of the Group.

Taking into account (i) consideration is based on audited net asset value of Logistic Company; (ii) the background to, and reasons for, the transaction contemplated under Logistics Company Share Transfer Agreement, in particular, the Company does not have specific plan regarding the Land; (iii) the potential financial effects on the Group as the result of the transaction contemplated under Logistics Company Share Transfer Agreement as mentioned below, we are of the view that the transaction contemplated under Logistics Company Share Transfer Agreement is on commercial terms and fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM ACCESS CAPITAL

3.5 Expect financial impact on the Group as the result of the transaction contemplated under Logistics Company Share Transfer Agreement
3.5.1 Total assets, total liabilities and net asset value

As mentioned in the “Letter from the Baord”, the Group will realise a gain of approximately RMB50,685,000 upon the disposal. Accordingly, the transaction contemplated under Logistics Company Share Transfer Agreement would have positive effects on the total assets and the net asset values of the Group. Given the Logistics Company is a newly set up company with no liabilities, the disposal will not have any effect on the total liabilities of the Group.

3.5.2 Earnings

As mentioned in the “Letter from the Board”, since Logistics Company holds cash and the Land only and has not carried out any operations, there will be no impact on the earnings of the Group as the result of the disposal except a gain on disposal of approximately RMB50,685,000 to be recognised by the Group.

3.5.3 Effects on the cash position of the Group

Upon the disposal, Logistics Company will generate net proceeds of approximately RMB66,662,000 and accordingly the Group’s “Cash and cash equivalent” classified under the balance sheet of the Group will increase by the same amount.

RECOMMENDATION

After having considered the above principal factors and based on the information provided and the representations made to us, we consider the terms of the Transactions contemplated thereunder to be fair and reasonable so far as the Independent Shareholders are concerned; and the Transactions are in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend to the Independent Shareholders to vote in favour of the relevant resolution(s) which will be proposed at the EGM to approve the Transactions.

Yours faithfully,

For and on behalf of

ACCESS CAPITAL LIMITED

Jimmy Chung Ivan Chan Executive Director Senior Vice President

— 27 —

INDEPENDENT VALUATION REPORT

APPENDIX I

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Room 3830-32, Sun Hung Kai Centre 30 Habour Road, Wanchai, Hong Kong Tel: (852) 2810 7337 Fax: (852) 2810 6337 Email: [email protected] Website: www.norton-app.coom

2 November 2007

The Directors Luoyang Glass Company Limited No. 9 Tang Gong Zhong Lu Xigong District, Luoyang City Henan Province, the People’s Republic of China

Dear Sirs,

Re : Portion of land located in No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang City, Henan Province, the People’s Republic of China

In accordance with your instructions from Luoyang Glass Company Limited (hereinafter referred to as the “Company”) for us to value the captioned property located in Luoyang City, Henan Province, the People’s Republic of China (hereinafter referred to as “the PRC”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of value of such property interest as at 8 October 2007 (hereinafter referred to as the “date of valuation”) for proposed disposal purposes.

BASIS OF VALUATION

Our valuation is our opinion of its market value which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion”.

Our valuation has been prepared in accordance with The HKIS Valuation Standards on Properties (1st Edition 2005) published by The Hong Kong Institute of Surveyors and the requirement as stated in the Practice Note 12 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

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INDEPENDENT VALUATION REPORT

APPENDIX I

In valuing the property interest, we have assumed that the Company has valid and enforceable title to the property interest which is freely transferable, and has free and uninterrupted right to use the same, for the whole of the land use terms granted subject to payment of land use fees and all requisite land premium / purchase consideration payable have been fully settled.

VALUATION METHODOLOGY

In arriving at our opinion of value of the property interest held by the Company in the PRC, we have adopted the Direct Comparison Approach assuming such property interest is capable of being sold in its existing state with the benefit of immediate vacant possession in the open market and by reference to comparable sales evidence.

VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the owner sells the property on the open market without the benefit of deferred terms contract, leaseback, joint venture, management agreement or any similar arrangements which could serve to affect the value of the property. In addition, no account has been taken of any option or right of pre-emption concerning or affecting sales of the property and no forced sale situation in any manner is assumed in our valuation.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property is free from encumbrances, restrictions and outgoings of any onerous nature which could affect its value.

TITLE INVESTIGATION

We have been provided by the Company with extract copies of documents in relation to the title to the property interest. We have not examined the original documents to verify the ownership and to ascertain the existence of any amendments that may not appear on the copies handed to us. In the course of our valuation, we have relied on the advice given by the Company and the legal opinion prepared by Wang Cheng Law Office, the Company’s legal adviser, on the PRC law (hereinafter referred to as the “PRC Legal Adviser”), regarding to the title of the property interest.

— 29 —

INDEPENDENT VALUATION REPORT

APPENDIX I

LIMITING CONDITIONS

We have inspected the exterior and, where possible the interior of the property. In the course of our inspections, we did not note any serious defects. However, no structural survey has been made and we are therefore unable to report whether the property is free from rot, infestation or any other defects. No tests were carried out on any of the services.

We have not carried out on-site measurements to verify the correctness of the site areas of the property but have assumed that the site areas shown on the documents available to us are correct. Dimensions, measurements and areas included in the attached valuation certificate are based on information contained in the documents provided to us and are, therefore, only approximations.

We have relied to a considerable extent on the information provided by the Company and have no reason to doubt the truth and accuracy of the information provided to us by the Company. We have been also advised by the Company that no material facts have been omitted from the information provided.

REMARKS

Unless otherwise stated, all monetary amounts stated in our valuation certificate are in Hong Kong dollars. The exchange rate adopted in our valuation is HK$1 = RMB0.97 which was the approximate exchange rate prevailing as at the date of valuation.

Our Valuation Certificate is enclosed herewith.

Yours faithfully, For and on behalf of Norton Appraisals Limited

Nick C. L. Kung MRICS, MHKIS, RPS (G.P.)

Director

Note: Mr. Nick C. L. Kung is a Registered Professional Surveyor who has more than 16 years’ experience in valuation of properties in Hong Kong and the PRC.

— 30 —

INDEPENDENT VALUATION REPORT

APPENDIX I

Property

Description and tenure

Particulars of occupancy

Capital value in its existing state as at 8 October 2007

Portion of land No. 9 Tang Gong Zhong Lu (the located in No. 9 Tang “Land”) comprises a parcel of land Gong Zhong Lu, with a total site area of Xigong District, approximately 470,874.3 sq.m.. Luoyang City, Henan Province, the The property comprises an irregularPeople’s Republic of shaped site within the Land having a China (the “PRC”) site area of approximately 79,444.9 sq.m..

An industrial complex is $69,500,000 erected thereon the property and is currently (100% interest: owner-occupied by the $69,500,000) Company.

The land use rights of the property have been granted for industrial use for a term expiring on the 6 May 2044.

Notes:

1) Pursuant to the Certificate for State-owned Land Use Rights No. Luo Shi Guo Yong (2007) Di 03000341 Hao dated 18 January 2007, the land use rights of the Land, having a site area of approximately 470,874.3 sq.m. have been granted to 洛陽玻璃股份有限公司 (Luoyang Glass Company Limited) (the “Company”) for a term expiring on the 6 May 2044 for industrial use.
2) Pursuant to the Business Licence No. Qi Gu Luo Zong Fu Zi Di 00327 Hao dated 25 February 2005, the Company has been established with a registered capital of RMB700,000,000 for an operation period of 40 years from 7 August 1996 to 6 August 2036. The main scope of business is to manufacture and sell glass.
3) No proper legal title document in respect of the buildings and structures erected thereon the property has been provided by the Company as at the date of valuation. In the course of our valuation, we have ascribed no commercial value to the buildings and structures erected thereon the property.
4) The opinion of the Company’s legal adviser on PRC law states that:
i) According to Certificate for State-owned Land Use Rights, Luoyang Glass Company Limited is in possession of a proper legal title to the property and is entitled to transfer, lease or mortgage the property with the residual term of the land use rights of the property at no extra land premium or other onerous payment payable to the government.
ii) All land premium and other costs of ancillary utility services of the property have been settled in full.

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INDEPENDENT VALUATION REPORT

APPENDIX I

5) In the course of our valuation, we have prepared our valuation on the following assumptions :
i) The Company is in possession of a proper legal title to the property and is entitled to transfer the property together with the residual term of its land use rights at no extra land premium and other onerous charges payable to the government;
ii) All land premium and other costs of resettlement and public utilities services, if any, have already been fully settled; and
iii) All consents, approvals and licences from relevant government authorities for the property have been granted without any onerous conditions or undue delay which might affect the value.

— 32 —

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

(a) Interests of Directors and chief executive of the Company

As at the Latest Practicable Date, the interests and short positions of the Directors or chief executive of the Company in the shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which is required to be (i) 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 the Directors or chief executive of the Company was taken or deemed to have under such provisions of the SFO); or (ii) entered in the register kept by the Company pursuant to section 352 of the SFO; or (iii) notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies were as follows:

Long position in the shares of the Company

				Interests in
		Nature of	Number of	underlying Shares
Name	Capacity	interest	A Shares held	(share options)
Director
Mr. Zhu Leibo	Beneficial owner	Personal	2,840	Nil
Mr. Zhu Liuxin	Beneficial owner	Personal	2,414	Nil

— 33 —

GENERAL INFORMATION

APPENDIX II

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company has an interest or short position in any shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which is required to be (i) 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 the Directors or chief executive of the Company was taken or deemed to have under such provisions of the SFO); or (ii) entered in the register kept by the Company pursuant to section 352 of the SFO; or (iii) notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies.

As at the Latest Practicable Date, none of the Directors or the controlling shareholders of the Company and their respective associates has any interest in a business, apart from the business of the Company, which competes or may compete with the business of the Company or has any other conflict of interest with the Company which would be required to be disclosed under Rule 8.10 of the Listing Rules.

As at the Latest Practicable Date, none of the Directors, Supervisors or chief executives of the Company or their spouses or children under 18 years of age were granted or had exercised any right to subscribe for any equity or debt securities of the Company or any of its associated corporations (within the meaning of Part XV of the SFO).

None of the Directors has any interest, direct or indirect, in any assets which 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 since 31 December 2006, the date to which the latest published audited financial statement of the Group was made up.

None of the Directors is materially interested in any contract or arrangement entered into by the Company or any of its subsidiaries which contract or arrangement is subsisting at the Latest Practicable Date and which is significant in relation to the business of the Group taken as a whole.

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GENERAL INFORMATION

APPENDIX II

(b) Substantial Shareholders’ and other Shareholders’ interests

As at the Latest Practicable Date, save as disclosed below, so far as is known to the Directors or chief executive of the Company, no other person has 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 were required to be notified to the Company and the Stock Exchange pursuant to section 324 of the SFO, or, who is, directly or indirectly, interested in 10 per cent. (10%) or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any members of the Group.

Long position in the shares of the Company

			Approximate
			percentage of
			total issued
		Number of	share capital
Name of Shareholder	Capacity	Shares held	of the Company
CLFG	Beneficial owner	179,018,242	35.80
CNBMG_(Note 1)_	Interest in controlled
	corporation	179,018,242	35.80

Note:

These 179,018,242 Shares are registered and owned by CLFG. The major shareholder of CLFG is CNBMG which owns 70% of the registered capital in CLFG. CNBMG is therefore deemed to be interested in 179,018,242 Shares held by CLFG under the SFO.

— 35 —

GENERAL INFORMATION

APPENDIX II

3. EXPERTS

The following is the qualifications of the experts who have been named in this circular or have given opinion or advice contained in this circular:

Name Qualification Access Capital a corporation licensed to carry Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

Norton Appraisals Limited An independent professional property valuer

As at the Latest Practicable Date, each of Access Capital and Norton Appraisals Limited does not have any shareholding in any member of the Group, nor does it have any right or option (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

Each of Access Capital and Norton Appraisals Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name and letter in the form and context in which they appear.

The letter and recommendation given by Access Capital and Norton Appraisals Limited are given as of the date of this circular for incorporation herein.

Each of Access Capital and Norton Appraisals Limited has, or has had, no direct or indirect interest in any assets which have been acquired or disposed of by, or leased to, any member of the Group or are proposed to be acquired of by, or leased to, any member of the Group since 31 December 2006, the date to which the latest published audited financial statement of the Group was made up.

4. SERVICE CONTRACTS

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

— 36 —

GENERAL INFORMATION

APPENDIX II

5. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in any litigation or claim of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against the Company or any of its subsidiaries.

6. MATERIAL CHANGES

The Directors confirm that there has been no material adverse change in the financial or trading position of the Group since 31 December 2006, the date to which the latest published audited financial statements of the Group were made up.

7. MISCELLANEOUS

(a) The registered and principal office of the Company is situated at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the People’s Republic of China;
(b) The company secretary and qualified accountant of the Company is Mr. Wong Yiu Hung, who is currently a member of the Hong Kong Institute of Certified Public Accountants and the Chartered Institute of Management Accountants;
(c) In the event of any inconsistency, the English text of this circular shall prevail over the Chinese text.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement are available for inspection during normal business hours up to and including 17 November 2007 at the offices of Li & Partners at 22nd Floor, World Wide House, Central, Hong Kong and at the EGM.

— 37 —

NOTICE OF EGM

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==> picture [49 x 42] intentionally omitted <==

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

(Stock Code: 1108)

Notice of the 2007 Fourth Extraordinary General Meeting

NOTICE IS HEREBY given that the 2007 Fourth Extraordinary General Meeting (“EGM”) of Luoyang Glass Company Limited (the “Company”) will be held at the conference room of the Company on 1st Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the People’s Republic of China at 9:00 a.m. on 18 December 2007 for considering and, if thought fit, passing the following ordinary resolutions:

“THAT:

(A) the Longxin Glass Share Transfer Agreement (as defined in the circular of the Company dated 2 November 2007, copy of which has been produced to the EGM marked “A” and signed by the chairman of the EGM for the purpose of identification), and the terms and conditions thereof and the transaction contemplated thereunder and the implementation thereof be and are hereby approved and confirmed;
(B) the Logistics Company Share Transfer Agreement (as defined in the circular of the Company dated 2 November 2007, copy of which have been produced to the EGM marked “B” and signed by the chairman of the EGM for the purpose of identification), and the terms and conditions thereof and the transaction contemplated thereunder and the implementation thereof be and are hereby approved and confirmed; and

— 38 —

NOTICE OF EGM

(C) any one of the Directors be authorised for and on behalf of the Company, among other matters, to sign, execute, perfect, deliver or to authorise signing, executing, perfecting and delivering all such documents and deeds, to do or authorise doing all such acts, matters and things as they may in their discretion consider necessary, expedient or desirable to give effect to and implement the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement respectively and to waive compliance from or make and agree such variations of a non-material nature to any of the terms of any of the Longxin Glass Share Transfer Agreement and the Logistics Company Share Transfer Agreement respectively as they may in their discretion consider to be desirable and in the interests of the Company and all the Directors’ acts as aforesaid be hereby approved, ratified and confirmed.”

By order of the Board

Luoyang Glass Company Limited Zhu Leibo Chairman

Luoyang, the PRC 2 November 2007

As at the date of this circular, the Board comprises five executive Directors: Mr. Zhu Leibo, Mr. Zhu Liuxin, Mr. Gao Tianbao, Mr. Xie Jun and Mr. Cao Mingchun, two non-executive Directors, Mr. Yang Weiping and Mr. Shen Anqin, and four independent non-executive Directors: Mr. Zhang Zhanying, Mr. Guo Aimin, Mr. Xi Shengyang and Mr. Ge Tieming.

Notes:

Holders of the Company’s A Shares who registered in the Shanghai Securities Central Clearing and Registration Corporation, and whose names appear on the register of members maintained by Shanghai Central Securities Registration and Clearing Company at the close of trading at 3:00 p.m. on 16 November 2007, are entitled to attend the EGM by presenting their identity cards, share account cards as well as power of attorney and identity cards of proxy(ies) (if applicable) during 8:00 a.m. - 12:00 a.m. and 2:00 p.m. - 5:30 p.m. on 27 November 2007 at the Secretarial Office of the Board of Directors, No. 9, Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC for registration in relation to attending the EGM; overseas shareholders may fax the copy of the same to the registered address of the Company on or before 27 November 2007.
Holders of the Company’s H Shares, whose names appear on the register of members maintained by Hong Kong Registrars Limited at the close of trading at 4:00 p.m. on 16 November 2007, are entitled to attend and vote at the EGM. The Register of Members of the Company’s H Shares will be closed from 17 November 2007 to 18 December 2007 (both days inclusive), during which period no transfer of H Shares will be effected in order to determine the list of holders of H shares eligible to attend the meeting. Holders of H shares of the Company who wish to attend the EGM must lodge all share transfer forms accompanied by the relevant H share certificates with the registrar of the Company’s H shares, namely Hong Kong Registrars Limited at Rooms 1901-5, Hopewell Centre, 183 Queen’s Road East, Hong Kong by 4:00 p.m. on 16 November 2007.

— 39 —

NOTICE OF EGM

Any shareholder entitled to attend and vote at the meeting may appoint a proxy or proxies (who need not be a shareholder of the Company) to attend and vote at the meeting on his/her behalf. A proxy of a Shareholder who has appointed more than one proxy may only vote on a poll. A proxy of the Shareholder needs not be a Shareholder.
The principal may appoint a proxy in written form (i.e. through the enclosed proxy form). The proxy form shall be signed by the principal or his attorney as authorised. In case that the proxy form is signed by the attorney of the principal, the power of attorney or other authority must be notarially certified. To be valid, the proxy form, together with a notarially certified copy of the power of attorney or other authorisation documents must be lodged at the Company’s share registrar in Hong Kong, Hong Kong Registrars Limited, at the Rooms 1901-5, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 24 hours before the time appointed for holding of the meeting or any adjournment thereof.
Shareholders who intend to attend the EGM in person or by proxy should complete and return the signed reply slip for attending the meeting to the registered address of the Company on or before 27 November 2007 personally or by mail or fax.
Shareholders or their proxies shall produce their proofs of identity when attending the EGM. A proxy of shareholder who is appointed to attend the meeting shall produce the proxy form at the same time.
The EGM is expected to last for one day. Shareholders and proxies attending the meeting should be responsible for their own traveling and accommodation expenses.
The Company’s registered address is as follows:

No. 9, Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, The People’s Republic of China Postal Code: 471009

Tel: 86-379-63908588 Fax: 86-379-63251984

Completion and return of the proxy form will not preclude shareholders of the Company from subsequently attending and voting in person at the EGM or any adjourned meetings should you so wish.

— 40 —

AI assistant

RoboSense Technology Co., Ltd — Proxy Solicitation & Information Statement 2007

50628_rns_2007-11-01_d6b22a83-b739-4a8c-9153-2245f85a7160.pdf

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF A 50% EQUITY INTEREST IN LONGXIN GLASS

CONNECTED TRANSACTION DISPOSAL OF A 100% EQUITY INTEREST IN LOGISTICS COMPANY AND

NOTICE OF FOURTH EXTRAORDINARY GENERAL MEETING

KPMG Corporate Finance Limited

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF A 50% EQUITY INTEREST IN LONGXIN GLASS

CONNECTED TRANSACTION

DISPOSAL OF A 100% EQUITY INTEREST IN LOGISTICS COMPANY

INTRODUCTION

LONGXIN GLASS SHARE TRANSFER AGREEMENT

Date

Parties

Details of the transaction

Consideration

Conditions Precedent

Completion

INFORMATION RELATING TO LONGXIN GLASS

REASONS AND BENEFITS OF THE LONGXIN GLASS SHARE TRANSFER AGREEMENT

FINANCIAL EFFECTS OF THE LONGXIN GLASS SHARE TRANSFER AGREEMENT

Effect on earnings

Effect on assets and liabilities

INFORMATION RELATING TO THE COMPANY, CLFG AND LISTING RULES IMPLICATIONS

LOGISTICS COMPANY SHARE TRANSFER AGREEMENT

Date

Parties

Details of the transaction

Consideration

LETTER FROM THE BOARD

Conditions precedent

Completion

LETTER FROM THE BOARD

INFORMATION RELATING TO LOGISTICS COMPANY

REASONS AND BENEFITS OF THE LOGISTICS COMPANY SHARE TRANSFER AGREEMENT AND APPLICATION OF THE SALE PROCEEDS

LETTER FROM THE BOARD

FINANCIAL EFFECTS OF THE LOGISTICS COMPANY SHARE TRANSFER AGREEMENT

Effect on earnings

Effect on assets and liabilities

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

EGM

PROCEDURE BY WHICH A POLL MAY BE DEMANDED

RECOMMENDATION

ADDITIONAL INFORMATION

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF A 50% EQUITY INTEREST IN LONGXIN GLASS

CONNECTED TRANSACTION

DISPOSAL OF A 100% EQUITY INTEREST IN LOGISTICS COMPANY

Luoyang Glass Company Limited

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF A 50% EQUITY INTEREST IN LONGXIN GLASS

AND

CONNECTED TRANSACTION DISPOSAL OF A 100% EQUITY INTEREST IN LOGISTICS COMPANY

I. INTRODUCTION

II. THE INDEPENDENT BOARD COMMITTEE

III. BASIS AND ASSUMPTIONS OF THE ADVICE

IV. PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background of the Group

1.2 Financial performance of the Group

LETTER FROM ACCESS CAPITAL

2. The Longxin Glass Share Transfer Agreement

2.1 The terms of Longxin Glass Share Transfer Agreement

2.2 Consideration

2.5.2 Earnings

2.5.3 Effects on the cash position/gearing of the Group

3. The Logistics Company Share Transfer Agreement

3.2 Consideration

3.3 Information relating to Logistics Company

3.5.2 Earnings

RECOMMENDATION

ACCESS CAPITAL LIMITED

BASIS OF VALUATION

VALUATION METHODOLOGY

VALUATION ASSUMPTIONS

TITLE INVESTIGATION

LIMITING CONDITIONS

REMARKS

RoboSense Technology Co., Ltd Proxy Solicitation & Information Statement 2007