RoboSense Technology Co., Ltd — Proxy Solicitation & Information Statement 2008

Nov 2, 2008

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.

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

(Stock Code: 1108)

(I) MAJOR TRANSACTION IN RELATION TO THE DISPOSAL OF THE COMPANY’S LAND USE RIGHTS AND BUILDINGS AND ANCILLARY STRUCTURES AND

(II) NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial Adviser to the Company

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A notice of the second extraordinary general meeting 2008 (the “ EGM ”) of the Company to be held at 9:00 a.m. on Friday, 19 December 2008 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 (the “ PRC ”) is set out on pages 25 to 27 of this circular.

A form of proxy for use in connection with at the EGM is enclosed. Whether or not you are able to attend the EGM in person, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon to the Company’s registered address at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC, as soon as possible but in any event not less than 24 hours before the time scheduled for the holding of the EGM or any adjournments thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournments thereof should you so wish.

3 November 2008

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
The Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Reasons for the Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Information of the Land Use Rights and the Buildings and Ancillary Structures . . . . . . . . . . . .	4
Information of the Company and Luoyang Land Centre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Financial Effects of the Disposal on the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Financial and Trading Prospects of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Listing Rules Implication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Procedure for Demanding a Poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Appendix I — Financial Information of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Appendix II — Independent Valuation Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix III — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25

— i —

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:

“Board”	the board of directors of the Company;
“Buildings and Ancillary	certain buildings and ancillary structures erected on the Land and
Structures”	retained by the Company for office, workshop and storage uses;
“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;
“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);
“Contract”	an acquisition contract entered into between the Company and Luoyang
	Land Centre on 24 October 2008, pursuant to which the Company
	agreed to sell the Land Use Rights and the Buildings and Ancillary
	Structures to Luoyang Land Centre;
“Directors”	the directors including the independent non-executive directors of the
	Company;
“Disposal”	the disposal of the Land Use Rights and the Buildings and Ancillary
	Structures by the Company to Luoyang Land Centre pursuant to the
	Contract;
“EGM”	the second extraordinary general meeting 2008 of the Company to be
	convened and held at 9:00 a.m. on Friday, 19 December 2008 at the
	conference room of the Company on 1st Floor, No. 9 Tang Gong Zhong
	Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC for
	the purpose of considering, and if thought fit, approving the Contract
	and the Disposal;
“Group”	The Company and its subsidiaries;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC;

— ii —

DEFINITIONS

“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 and not connected with the Company and its subsidiaries
	and its connected persons (as defined in the Listing Rules);
“Land”	a piece of land of the Company of approximately 218,658.30 sq. meters
	located at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang
	Municipal, Henan Province, the PRC;
“Land Use Rights”	the state-owned construction land use rights of the Land;
“Latest Practicable Date”	29 October 2008, being the latest practicable date before the printing
	of this circular for ascertaining certain information;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange;
“Luoyang Land Centre”	洛陽市土地儲備整理中心(Luoyang Land Reserves Coordination
	Centre*), a state-owned business unit (事業單位) belonging to Luoyang
	government and an Independent Third Party;
“percentage ratio”	has the meaning ascribed to this term under the Listing Rules, as
	application to a transaction;
“PRC”	the People’s Republic of China which, for the purpose of this circular,
	excludes Hong Kong, Macau and Taiwan;
“RMB”	Renminbi, the lawful currency of the PRC;
“SFO”	the 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;
“subsidiaries”	has the meaning given to it in the Listing Rules; and
“Supervisors”	the supervisors of the Company.

• For identification purpose only

— iii —

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. Gao Tianbao (Chairman) Mr. Xie Jun Mr. Cao Mingchun Mr. Song Jianming Ms. Song Fei

Registered office:

No. 9 Tang Gong Zhong Lu Xigong District Luoyang Municipal Henan Province the PRC

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

3 November 2008

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION IN RELATION TO THE DISPOSAL OF THE COMPANY’S LAND USE RIGHTS AND BUILDINGS AND ANCILLARY STRUCTURES

INTRODUCTION

Reference is made to the major transaction announcement of the Company dated 24 October 2008.

— 1 —

LETTER FROM THE BOARD

On 24 October 2008, the Company and Luoyang Land Centre, an Independent Third Party, entered into the Contract pursuant to which the Company agreed to sell and Luoyang Land Centre agreed to purchase the Land Use Rights and the Buildings and Ancillary Structures for a total consideration of RMB250,000,000 (approximately HK$287,500,000).

The purpose of this Circular is to provide Shareholders, amongst other things, with (i) further information on the Disposal; (ii) a valuation report prepared by Norton Appraisals Limited, an independent professional property valuer, in connection with the Land Use Rights and the Buildings and Ancillary Structures; and (iii) a notice of the EGM for the purpose of approving the Contract and the Disposal.

Set out below is a summary of the principal terms of the Contract:

THE CONTRACT

(1) Date

24 October 2008

(2) Parties

Seller: The Company

Purchaser: Luoyang Land Centre. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Luoyang Land Centre and its ultimate beneficial owner are Independent Third Parties

(3) Details of the Disposal

The Company and Luoyang Land Centre entered into the Contract on 24 October 2008 pursuant to which the Company has agreed to sell the Land Use Rights and the Buildings and Ancillary Structures to Luoyang Land Centre. Completion of the Contract shall be conditional upon, amongst other things, obtaining the requisite approval from the Shareholders at the EGM in accordance with the Listing Rules.

— 2 —

LETTER FROM THE BOARD

(4) Consideration

The total consideration of the Land Use Rights and the Buildings and Ancillary Structures is RMB250,000,000 (which includes the consideration of RMB180,000,000 for the Land Use Rights and the consideration of RMB70,000,000 for the Buildings and Ancillary Structures), which was determined by the Company and Luoyang Land Centre after arm’s length negotiations with reference to the unaudited net book value of the Land Use Rights and the Buildings and Ancillary Structures recorded in the financial statements of the Company as at 30 September 2008 and the prevailing market value of comparable assets in the market in the same area. Based on the generally accepted accounting standards in the PRC and the International Financial Reporting Standards, the total unaudited net book value of the Land Use Rights and the Buildings and Ancillary Structures as at 30 September 2008 was RMB74,658,787.49 and RMB40,001,507.87 respectively. The Land Use Rights and the Buildings and Ancillary Structures were valued by Norton Appraisals Limited, an independent professional property valuer, to carry a value at RMB247,540,000 as at 22 October 2008. (Please refer to Appendix II to this circular for the valuation report prepared by Norton Appraisals Limited.)

In view of the foregoing and the substantial gain to be recorded by the Company on completion of the Disposal as referred to below, the Board (including independent non-executive Directors) considers that the consideration of the Land Use Rights and the Buildings and Ancillary Structures is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Out of the total consideration of RMB250,000,000, not less than RMB130,000,000 will be paid by Luoyang Land Centre on 20 December 2008 or on the date of approval of the Contract by the Shareholders, whichever is later, (“ First Payment ”) and the balance of consideration will be paid by Luoyang Land Centre before 20 December 2009.

(5) Delivery of the Land Use Rights and the Buildings and Ancillary Structures

The Company shall provide Luoyang Land Centre with all the original certificates of rights in respect of the Land Use Rights and the Buildings and Ancillary Structures at the time of the First Payment.

On 20 December 2008 or on the date of approval of the Contract by the Shareholders, whichever is later, the Company and Luoyang Land Centre shall complete the relevant registration procedures regarding the transfer and cancellation of the legal rights relating to the Land and the Buildings and Ancillary Structures. Thereafter, the Company shall hand over the Land and the Buildings and Ancillary Structures to Luoyang Land Centre.

— 3 —

LETTER FROM THE BOARD

REASONS FOR THE DISPOSAL

The Land and the Buildings and Ancillary Structures are located inside the relics of the Luoyang City of the Sui and Tang Dynasties (隋唐洛陽城遺址). Pursuant to the Bill on Protection of the Relics of the Luoyang City of the Sui and Tang Dynasties (洛陽市隋唐洛陽城遺址保護條例草案), the development of construction and infrastructure projects in the area may be restricted in order to preserve the historical and cultural heritage. Accordingly, the Directors are of the view that the local policies on the preservation of historical relics may impede the expansion and upgrade of the existing manufacturing facilities of the Company in the area and hence limit the business development of the Company in the future. On the other hand, the Directors believe that the disposal of the Land Use Rights and the Buildings and Ancillary Structures to the Luoyang Land Centre at a reasonable price will both support the local government’s policies of protecting historical relics and bring additional revenues to the Company which will in turn enhance the financial position, profitability and liquidity of the Company and support future business development of the Company.

Upon completion of the Disposal, based on the generally accepted accounting standards in the PRC and the International Financial Reporting Standards, the Company is expected to realize a significant gain of approximately RMB175,341,212.51 and RMB209,998,492.13 respectively. The gain is the difference between the total consideration of RMB250,000,000 and the total unaudited net book value of the Land Use Rights and the Buildings and Ancillary Structures as at 30 September 2008. The Company intends to record such gain from the Disposal in the accounts of the Group for the year ending 31 December 2008. The sale proceeds will be used as general working capital of the Company for its future development.

The terms of the Contract are arrived at after arm’s length negotiations which are on normal commercial terms. The Directors, including the independent non-executive Directors, consider that the Disposal is in ordinary course of business and on normal commercial terms and the terms of the Contract are fair and reasonable and in the interest of the Company and its Shareholders as a whole.

INFORMATION OF THE LAND USE RIGHTS AND THE BUILDINGS AND ANCILLARY STRUCTURES

The Land Use Rights relate to a Land of the Company of approximately 218,658.30 sq. meters located at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC.

The Buildings and Ancillary Structures are certain buildings and ancillary structures erected on the Land and retained by the Company for office, workshop and storage uses. The building ownership certificates of 40 buildings erected on the Land show that these 40 buildings are owned by 洛陽玻璃廠 or 洛陽浮法玻璃集團 有限公司, rather than the Company. 洛陽玻璃廠 is the former name of 洛陽浮法玻璃集團有限公司. These 40 buildings have been injected into the Company as registered capital by 洛陽浮法玻璃集團有限公司 when setting up the Company and the Company has possessed and used these 40 buildings. Notwithstanding that these 40 buildings are not under the name of the Company in their building ownership certificates, according to the legal opinion of the PRC legal adviser of the Company, these 40 buildings are legally owned by the Company and the Company has the rights of transfer thereof. There will not be any legal impediments for the Company to obtain the relevant building ownership certificates for these 40 buildings. In addition, 洛陽浮法玻璃集團有 限公司 has no objection to the ownership of these 40 buildings by the Company.

— 4 —

LETTER FROM THE BOARD

As the Buildings and Ancillary Structures are of a supporting nature and the related production lines had not been in use by the Company, they are not directly attributable to the revenue of the Group.

Based on the generally accepted accounting standards in the PRC, the unaudited net book value of each of the Land Use Rights and the Buildings and Ancillary Structures as at 30 September 2008 was RMB34,657,279.62 and RMB40,001,507.87 respectively, while under the International Financial Reporting Standards, the unaudited net book value of each of the Land Use Rights and the Buildings and Ancillary Structures as at 30 September 2008 was RMB nil and RMB40,001,507.87 respectively. As explained above, the Land Use Rights and the Buildings and Ancillary Structures have not generated any income for the Company for the two financial years ended 31 December 2006 and 31 December 2007.

INFORMATION OF THE COMPANY AND LUOYANG LAND CENTRE

The Company is the place of origin for one of three great float glass production methods — “Luoyang Float Glass”. It is one of the largest manufacturers and distributors of float glass in glass industry in the PRC. The Company is principally engaged in the production and sale of float flat glass and reprocessed automobile glass.

Luoyang Land Centre is a state-owned business unit (事業單位) belonging to Luoyang government and is principally engaged in city construction by using land development fund, protection of the safety and added-value of the state-owned land assets, early stage basic development of city construction land, development of the land reserve, development, coordination and re-cultivation of supplementary cultivated land. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Luoyang Land Centre and its ultimate beneficial owner are Independent Third Parties.

FINANCIAL EFFECTS OF THE DISPOSAL ON THE GROUP

Earnings

A gain on Disposal of about RMB209,998,492.13, calculated under the International Financial Reporting Standards, will be reflected in the consolidated profit and loss account of the Group for the year ending 31 December 2008. As the Land Use Rights and the Buildings and Ancillary Structures are not directly attributable to the revenue of the Group, there will be no immediate impact, other than the gain on Disposal described above, on the earnings of the Group upon completion of the Disposal. Any further impact on the earnings of the Group will depend upon the use of the proceeds of the Disposal that is presently earmarked to be used as general working capital and for the Group’s future development.

Assets

Based on the International Financial Reporting Standards, the aggregate unaudited carrying value of the Land Use Rights and the Buildings and Ancillary Structures in the books of account of the Company as at 30 September 2008 was RMB40,001,507.87. Accordingly, the Disposal will give rise to a gain of RMB209,998,492.13, calculated based on the difference between the total consideration of RMB250,000,000 and the unaudited aggregate net book value of the Land Use Rights and the Buildings and Ancillary Structures as at 30 September 2008.

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LETTER FROM THE BOARD

Upon completion of the Disposal, the total assets of the Group would be increased by an amount equal to the gain on Disposal of RMB209,998,492.13.

The consolidated net asset value of the Group will be increased by the same amount of gain over the net book value of the Land Use Rights and the Buildings and Ancillary Structures in the books of account of the Group as at 30 September 2008. The Group will upon completion of the Contract no longer have any interest in the Land and the Buildings and Ancillary Structures.

Liquidity

The liquidity of the Group will be markedly increased by the Disposal which will result in an infusion of RMB250,000,000 in cash, of which not less than RMB130,000,000 will be paid to the Company on 20 December 2008 or on the date of the EGM if the Shareholders approved the Contract, whichever is the later, and the balance of the consideration will by paid to the Company before 20 December 2009.

Gearing

The Disposal will have a marked impact on the Group’s consolidated balance sheet, with the Group’s gearing, being total bank and other borrowings as at 31 December 2007 divided by net equity, decreasing to 2.3 times from 4.4 times after completion of the Contract. This would strengthen the Group’s financial position for developing its business.

FINANCIAL AND TRADING PROSPECTS OF THE GROUP

In the first half of 2008, the growth in the demand of glass was depressed by various factors, including the tightened monetary policy and macro-economic control on real estate industry in the PRC, appreciation of Renminbi and fluctuations of exchange rate leading to for instance a substantial reduction in export tax rebate from 11% to 5%. The Directors expect the excessive supply of glass in the PRC market and surging raw material and fuel price will likely put pressure on selling prices of glass and export sales of glass may also deteriorate as a result of substandard quality of glass produced by many local manufacturers in the PRC. The Group’s several production lines are due for upgrades and this has given rise to difficulties in maintenance of product volume and quality and output ratio and upward pressure on maintenance and other operating costs. At present, the Group has four production lines that are in use while five production lines have ceased operations. The Company endeavoured to overcome these trading difficulties by strengthening management supervision and marketing efforts with a view to optimising its product mix and improving production efficiency.

— 6 —

LETTER FROM THE BOARD

LISTING RULES IMPLICATION

As the relevant percentage ratios are more than 25% but less than 75%, the Disposal constitutes a major transaction of the Company under Rule 14.06(3) of the Listing Rules and is subject to, amongst other things, the approval of the Shareholders at the EGM.

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 19 December 2008 for the purpose of seeking Shareholders’ approval on the Contract and the Disposal. Any Shareholder and his/her associates with a material interest in the Disposal and the Contract will abstain from voting on the resolution therefor at the EGM. As no Shareholder and his/her associates have a material interest in the Disposal and the Contract, no Shareholder is required to abstain from voting on the resolution for approving the Contract. The votes to be taken at the EGM in relation to the said resolution will be taken by poll. A notice of the EGM is set out on pages 25 to 27 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 FOR DEMANDING A POLL

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.

— 7 —

LETTER FROM THE BOARD

RECOMMENDATION

The Directors (including the independent non-executive Directors) consider that the terms of the Contract are normal commercial terms and are fair and reasonable so far as the Shareholders are concerned, and the Disposal is in the interests of the Company and its Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM for approving the Contract and the Disposal.

ADDITIONAL INFORMATION

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

Yours faithfully, For and on behalf of the Board Luoyang Glass Company Limited Gao Tianbao Chairman

Note: In this circular, certain amounts expressed in RMB have been translated into HK$ at RMB1 = HK$1.15 for illustrative purposes only. No representation is made that any amount in HK$ or RMB could have been or can be converted at the above rates or at any other rates.

— 8 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

INDEBTEDNESS STATEMENT

Borrowings

At the close of business on 30 September 2008, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had outstanding borrowings as follows:

• (a) Other loan amounting to approximately RMB165,500,000 was repayable within one year, comprising RMB65,500,000 with interest charged at the annual rate ranging from 7.47% to 18%, RMB50,000,000 with interest charged at the annual floating rate of the same term primary loan interest rate announced by the People’s Bank of China and RMB50,000,000 with interest charged at the annual floating rate of 13% over one year primary loan interest rate announced by the People’s Bank of China.

• (b) Secured guaranteed bank loans amounting to approximately RMB702,511,000, comprising short-term bank loans of approximately RMB696,811,000 and long-term bank loans of approximately RMB5,700,000, comprising approximately RMB684,511,000 with interest charged at the annual rate ranging from 2.5% to 9.34% and RMB18,000,000 with interest charged at the annual floating rate of half year primary loan interest rate announced by the People’s Bank of China. These bank loans are secured by the following:

• certain prepaid lease payments in respect of medium-term leasehold land and certain property, plant and equipment with net book value of approximately RMB2,824,000 and RMB47,860,000 respectively;

• guaranteed by a de facto controller of the Group;

• guaranteed by a shareholder of the Group;

• guaranteed by an associate of the Group;

• guaranteed by third parties of the Group;

• certain bank deposits of the Group of RMB40,000,000; and

• equity interest held in an associate of RMB111,000,000.

• (c) Unsecured short-term bank loan amounting to RMB4,000,000, interest is charged at the rate of 10.8% per annum.

— 9 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Capital commitments

As at 30 September 2008, the Group had capital commitments of RMB805,000 contracted but not provided for in the financial statements in respect of acquisition of property, plant and machinery.

Pledge of assets

As at 30 September 2008, certain assets of the Group were pledged to secure bank facilities granted to the Group, as follows:

• (a) legal charges over certain of the Group’s buildings with an aggregate net book value of RMB5,628,000;

• (b) legal charges over certain of the Group’s plant and machineries with an aggregate net book value of RMB42,232,000;

• (c) legal charges over certain of the Group’s prepaid lease payments in respect of medium-term leasehold land with an aggregate net book value of RMB2,824,000;

• (d) pledge of certain bank deposits of the Group of RMB242,450,000; and

• (e) pledge of equity interest in an associate of RMB111,000,000.

Operating lease commitments

As at 30 September 2008, the Group had no operating commitments.

Contingent liabilities

As at 30 September 2008, the Group had undue bank acceptance bills amounting to approximately RMB241,991,000 which were discounted to banks.

Disclaimers

Save as aforesaid or otherwise disclosed in this circular, and apart from intra-group liabilities, and normal trade payables in the ordinary course of business, none of the companies in the Group had any outstanding debt securities, liabilities under acceptances, acceptance credits, finance lease or hire purchase commitments, mortgages, charges, loan capital and overdraft or other similar indebtedness, as at the close of business on 30 September 2008.

— 10 —

APPENDIX I FINANCIAL INFORMATION OF THE GROUP

The Directors have confirmed that there has not been any material change in the indebtedness and contingent liabilities of the Group since 30 September 2008.

For the purpose of the above indebtedness statement, foreign currency amounts have been translated into Renminbi at the rates of exchange prevailing at the close of business on 30 September 2008.

Working capital

The Directors are of the opinion that, after taking into account the financial resources and banking facilities available to the Group, including the proceeds from the Disposal and the Group’s present available internal resources, the Group will have sufficient working capital for its requirements in next twelve months from the date of this circular.

— 11 —

INDEPENDENT VALUATION REPORT

APPENDIX II

The following is the text of a letter and valuation certificate, prepared for the purpose of incorporation in this circular, received from Norton Appraisals Limited, an independent valuer, in connection with its valuation as at 22nd October, 2008.

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Room 3830-32, Sun Hung Kai Centre 30 Harbour Road Wanchai Hong Kong Tel : (852) 2810 7337 Fax : (852) 2810 6337

22nd October, 2008

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 industrial complex 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 22nd October, 2008 (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 under generally accepted valuation procedures and practices, which are in compliance with Chapter 5 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Practice Note 12 issued by The Stock Exchange of Hong Kong Limited.

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INDEPENDENT VALUATION REPORT

APPENDIX II

In valuing the property interest, we have relied on the legal opinion of the PRC Legal Adviser (as defined below) and are of the view 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 valuing the property interest in the PRC, we have adopted a combination of Direct Comparison Method and Depreciated Replacement Cost Approach. Regarding the land portion, reference has been made to the sales transactions as available to us in the relevant market. As the nature of the buildings and structures cannot be valued on the basis of Market Value, we have valued those on the basis of their Depreciated Replacement Cost. The Depreciated Replacement Cost Approach considers the cost to reproduce or replace in new condition the assets appraised in accordance with current market prices for similar assets, with allowance for accrued depreciation arising from physical condition, utility, age, wear and tear, or obsolescence present (physical, functional or economic), taking into consideration past and present maintenance policy and rebuilding (in case of building structures) history. This approach is internationally recognized as the most reliable indication of the value of assets in the absence of a known market based on market transactional comparables.

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 sale 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 河南魏征律師事務所 Henan Weizheng Law Office, the Company’s legal adviser, on the PRC law (hereinafter referred to as the “ PRC Legal Adviser ”), regarding the title of the property interest.

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INDEPENDENT VALUATION REPORT

APPENDIX II

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/floor areas of the property but have assumed that the site/floor 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 Renminbi.

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 17 years’ experience in valuation of properties in Hong Kong and the PRC.

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INDEPENDENT VALUATION REPORT

APPENDIX II

VALUATION CERTIFICATE

Description and tenure

Property

Portion of industrial No. 9 Tang Gong Zhong Lu (the complex located in “Land”) comprises a parcel of land No. 9 Tang Gong with a total site area of approximately Zhong Lu, Xigong 470,874.3 sq.m.. District, Luoyang City, Henan Province, The property comprises an irregularthe People’s Republic shaped site within the Land having a of China (the “PRC”) site area of approximately 218,658.3

The property comprises an irregularshaped site within the Land having a site area of approximately 218,658.3 sq.m. together with various buildings and structures erected thereon. Major buildings include 14 blocks of 1 to 6- storey workshop/warehouse buildings. The property includes also some 1 to 2-storey ancillary buildings and structures for office, workshop and storage uses.

Particulars of

occupancy

The property is either vacant or occupied by the Company.

Capital value in its existing state as at 22nd October, 2008

RMB247,540,000

All buildings and structures appeared to be completed in the period between 1965 and 2006.

The total gross floor area of the property is approximately 28,354.32 sq.m., excluding the additional structures of various workshop and warehouse buildings, which have a total gross floor area of approximately 42,218.61 sq.m., and the ancillary buildings and structures.

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

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INDEPENDENT VALUATION REPORT

APPENDIX II

Notes:

• (1) Pursuant to the Certificate for State-owned Land Use Rights No. Luo Shi Guo Yong (2007) Di 03000341 Hao dated 18th 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 6th May, 2044 for industrial use.

• (2) Pursuant to the Business Licence No. Qi Gu Luo Zong Fu Zi Di 00327 Hao dated 25th February, 2005, the Company has been established with a registered capital of RMB700,000,000 for an operation period of 40 years from 7th August, 1996 to 6th August, 2036. The main scope of business is confined to manufacture and sell glass.

• (3) Pursuant to 38 Building Ownership Certificates issued by 洛陽房地產管理局 (Luoyang Real Estate Administration Bureau), 40 buildings of the property with a total gross floor area of approximately 28,354.32 sq.m. are legally vested in 洛陽玻璃廠 and 洛陽浮法玻璃集團公司. The salient details of the documents are as follows:

		Dates of	No. of		Gross
Building Ownership Certificate	Owner	Issuance	Storey	Use	Floor Area
					(sq.m.)
Luo Shi Fang Quan Zheng (2001) Zi Di No. X137011	洛陽玻璃廠	12 April, 2001	1	Industrial	255.05
Luo Shi Fang Quan Zheng (2001) Zi Di No. X137012	洛陽玻璃廠	12 April, 2001	1	Industrial	40.42
Luo Shi Fang Quan Zheng (2001) Zi Di No. X137013	洛陽玻璃廠	12 April, 2001	1	Other Uses	61.88
Luo Shi Fang Quan Zheng (2001) Zi Di No. X137014	洛陽玻璃廠	12 April, 2001	1	Industrial	49.67
Luo Shi Fang Quan Zheng (2001) Zi Di No. X137018	洛陽玻璃廠	12 April, 2001	1	Godown	76.38
Luo Shi Fang Quan Zheng (2001) Zi Di No. X137019	洛陽玻璃廠	12 April, 2001	1	Godown	186.54
Luo Shi Fang Quan Zheng (2001) Zi Di No. X137020	洛陽玻璃廠	12 April, 2001	1	Godown	76.38
Luo Shi Fang Quan Zheng (2001) Zi Di No. X137049	洛陽浮法玻璃集團公司	16 April, 2001	2	Other Uses	309.67
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149248	洛陽玻璃廠	16 August, 2001	1	N.A.	905.19
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149249	洛陽玻璃廠	16 August, 2001	1	N.A.	53.35
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149251	洛陽玻璃廠	16 August, 2001	2	N.A.	2,410.07
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149257	洛陽玻璃廠	17 August, 2001	1	N.A.	205.77
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149258	洛陽玻璃廠	17 August, 2001	1	N.A.	94.42
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149259	洛陽玻璃廠	17 August, 2001	1	N.A.	132.99
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149260	洛陽玻璃廠	17 August, 2001	1	N.A.	229.11
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149261	洛陽玻璃廠	17 August, 2001	1	N.A.	96.00
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149262	洛陽玻璃廠	17 August, 2001	1	N.A.	286.87
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149263	洛陽玻璃廠	17 August, 2001	1	N.A.	164.05
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149264	洛陽玻璃廠	17 August, 2001	1	N.A.	231.80
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149265	洛陽玻璃廠	17 August, 2001	4	N.A.	97.76
Luo Shi Fang Quan Zheng (2001) Zi Di No. X149270	洛陽玻璃廠	17 August, 2001	1	N.A.	292.31
Luo Shi Fang Quan Zheng (2001) Zi Di No. X150047	洛陽玻璃廠	21 August, 2001	2	N.A.	236.51
Luo Shi Fang Quan Zheng (2001) Zi Di No. X150611	洛陽玻璃廠	23 August, 2001	1	N.A.	454.23
Luo Shi Fang Quan Zheng (2001) Zi Di No. X150616	洛陽玻璃廠	23 August, 2001	1	N.A.	1,451.98
Luo Shi Fang Quan Zheng (2001) Zi Di No. X150620	洛陽玻璃廠	23 August, 2001	2	N.A.	1,747.94
Luo Shi Fang Quan Zheng (2001) Zi Di No. X150623	洛陽玻璃廠	23 August, 2001	2	N.A.	585.37
Luo Shi Fang Quan Zheng (2001) Zi Di No. X150625	洛陽玻璃廠	23 August, 2001	4	N.A.	615.46
Luo Shi Fang Quan Zheng (2001) Zi Di No. X150649	洛陽玻璃廠	23 August, 2001	1	N.A.	703.90
Luo Shi Fang Quan Zheng (2001) Zi Di No. X150650	洛陽玻璃廠	23 August, 2001	1	N.A.	506.08
Luo Shi Fang Quan Zheng (2001) Zi Di No. X150651	洛陽玻璃廠	23 August, 2001	1	N.A.	207.99

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INDEPENDENT VALUATION REPORT

APPENDIX II

Dates of No. of Building Ownership Certificate Owner Issuance Storey Use Luo Shi Fang Quan Zheng (2001) Zi Di No. X150652 洛陽玻璃廠 23 August, 2001 1 N.A. Luo Shi Fang Quan Zheng (2001) Zi Di No. X150653 洛陽玻璃廠 23 August, 2001 1 N.A. Luo Shi Fang Quan Zheng (2001) Zi Di No. X150654 洛陽玻璃廠 23 August, 2001 1 N.A. Luo Shi Fang Quan Zheng (2001) Zi Di No. X150655 洛陽玻璃廠 23 August, 2001 1 N.A. Luo Shi Fang Quan Zheng (2001) Zi Di No. X150664 洛陽玻璃廠 24 August, 2001 6 N.A. Luo Shi Fang Quan Zheng (2001) Zi Di No. X150664 洛陽玻璃廠 24 August, 2001 6 N.A. Luo Shi Fang Quan Zheng (2001) Zi Di No. X161809 洛陽浮法玻璃集團公司 11 December, 2001 4 Industrial Luo Shi Fang Quan Zheng (2001) Zi Di No. X161810 洛陽浮法玻璃集團公司 11 December, 2001 1 Industrial Luo Shi Fang Quan Zheng (2001) Zi Di No. X161811 洛陽浮法玻璃集團公司 11 December, 2001 1 Industrial Luo Shi Fang Quan Zheng (2001) Zi Di No. X161811 洛陽浮法玻璃集團公司 11 December, 2001 1 Industrial Total:

Gross Floor Area (sq.m.) 303.19 292.64 170.16 170.08 3,216.44 7,609.12 3,454.81 231.82 54.52 86.40

28,354.32

• (4) The notional apportionment of the Market Value of the property as at 22nd October, 2008 into building and land elements is as follows:

Building Element : RMB68,240,000 Land Element : RMB179,300,000 Total : RMB247,540,000

• (5) The opinion of the PRC Legal Adviser states that:

• (i) The Company is in possession of a proper legal title to the land use rights of the Land portion of the property and is entitled to transfer, lease or mortgage the land use rights of 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) 洛陽玻璃廠 is the former name of 洛陽浮法玻璃集團有限公司. Although the building ownership certificates of the above-mentioned 40 buildings erected on the Land portion of the property with a total gross floor area of approximately 28,354.32 sq. m. show that these 40 buildings are owned by 洛陽玻璃廠 or 洛陽浮法玻 璃集團有限公司, these 40 buildings have been injected into the Company as registered capital by 洛陽浮 法玻璃集團有限公司 when setting up the Company and the Company has possessed and used these 40 buildings. Accordingly, these 40 buildings are legally owned by the Company and the Company has the rights of transfer thereof. 洛陽浮法玻璃集團有限公司 has no objection to the ownership of these buildings by the Company.

• (iii) There will not be any legal impediments for the Company to obtain the relevant building ownership certificates for the buildings and structures in the property.

• (iv) 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 II

• (6) In the course of our valuation, we have prepared our valuation on the following assumptions:

• (i) On the basis of the opinion of the PRC Legal Adviser, 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.

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GENERAL INFORMATION

APPENDIX III

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, none of the Directors, Supervisors 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, Supervisors 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 2007, the date to which the latest published audited financial statement of the Group was made up.

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GENERAL INFORMATION

APPENDIX III

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.

(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
China National Building Material	Interest in controlled	179,018,242	35.80
Group Corporation (“CNBMG”)	corporation
(Note 1)

Note:

1. 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.

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GENERAL INFORMATION

APPENDIX III

3. 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.

4. 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
PKF Certified Public	Certified public accountants
Accountants (“PKF”)
Norton Appraisals Limited	An independent professional property valuer

As at the Latest Practicable Date, each of PKF 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 PKF 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 PKF and Norton Appraisals Limited are given as of the date of this circular for incorporation herein.

Each of PKF 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 2007, the date to which the latest published audited financial statement of the Group was made up.

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GENERAL INFORMATION

APPENDIX III

5. 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.

6. MATERIAL CONTRACTS

Save as disclosed below, no material contracts (not being contracts entered into in the ordinary course of business carried out by the Group) have been entered into by any member of the Group within the two years preceding the Latest Practicable Date:

• (a) the Contract;

• (b) 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 洛陽龍新玻璃有限公司 (Luoyang Longxin Glass Company Limited*) by the Company from CLFG at a consideration of RMB35,000,000;

• (c) 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 洛陽洛玻物流有限公司 (Luoyang CLFG Logistics Company Limited*) from the Company to CLFG at a consideration of RMB70,363,714; and

• (d) an asset sale and purchase contract entered into between the Company and 汝陽縣工藝美術福利 廠 (Ruyang Arts and Crafts Welfare Factory*) on 28 December 2007, pursuant to which the Company agreed to sell a production line to Ruyang Arts and Crafts Welfare Factory at a consideration of RMB35,000,000.

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GENERAL INFORMATION

APPENDIX III

7. MISCELLANEOUS

• (a) The company secretary of the Company is Mr. Ip Pui-Sum, who is currently a fellow member of the Association of Chartered Certified Accountants (United Kingdom), an associate of the Hong Kong Institute of Certified Public Accountants, the Society of Chinese Accountants & Auditors, the Chartered Institute of Management Accountants, the Institute of Chartered Secretaries and Administrators and the ordinary member of Hong Kong Institute of Chartered Secretaries. The qualified accountant of the Company is Ms. To Wai Kum, who is currently a fellow member of the Hong Kong Institute of Certified Public Accountants and an associate of the Institute of Chartered Accountants in England and Wales.

• (b) The registered and principal office of the Company is situated at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC.

• (c) The share registrar and transfer office of the H Shares of the Company is Hong Kong Registrars Limited at Rooms 1901-5, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (d) In the event of any inconsistency, the English text of this circular shall prevail over the Chinese text.

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GENERAL INFORMATION

APPENDIX III

8. DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at the office of Messrs. Li & Partners at 22nd Floor, World Wide House, Central, Hong Kong during normal business hours on any weekday (except public holidays) for a period of 14 days from the date hereof:

• (a) the annual reports of the Company for the two years ended 31 December 2006 and 31 December 2007 and the interim report of the Company for the period ended 30 June 2008;

• (b) the memorandum and articles of association of the Company;

• (c) each of the material contracts, as referred to in the paragraph headed “Material Contracts” in this Appendix;

• (d) a copy of this circular;

• (e) a copy of the circular of the Company dated 25 January 2008 in respect of a discloseable transaction in relation to the disposal of the Company’s idle production line;

• (f) the independent valuation report, as referred to in Appendix II;

• (g) the working capital comfort letter as provided by PKF Certified Public Accountants to the Board pursuant to the requirements of the Listing Rules; and

• (h) the written consent of PKF Certified Public Accountants and Norton Appraisals Limited as referred to in paragraph headed “Experts” of this appendix.

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NOTICE OF EGM

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

(Stock Code: 1108)

NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING 2008

NOTICE IS HEREBY given that the Second Extraordinary General Meeting 2008 (the “ EGM ”) of 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 (the “ PRC ”) at 9:00 a.m. on 19 December 2008 for the purpose of considering and, if thought fit, passing the following ordinary resolutions:

“ THAT:

1. the Contract (as defined in the circular of the Company dated 3 November 2008, a 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; and

2. 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 Contract and to waive compliance from or make and agree such variations of a non-material nature to any of the terms of the Contract 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 Gao Tianbao Chairman

Luoyang, the PRC

3 November 2008

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NOTICE OF EGM

As at the date of this notice, the Board comprises five executive Directors: Mr. Gao Tianbao, Mr. Xie Jun, Mr. Cao Mingchun, Mr. Song Jianming and Ms. Song Fei, 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:

1. 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 18 November 2008, 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. to 12:00 a.m. and 2:00 p.m. to 5:30 p.m. on 28 November 2008 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 28 November 2008.

2. 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 18 November 2008, are entitled to attend and vote at the EGM. The Register of Members of the Company’s H Shares will be closed from 19 November 2008 to 19 December 2008 (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 EGM. 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 18 November 2008.

3. Any shareholder entitled to attend and vote at EGM may appoint a proxy or proxies (who need not be a shareholder of the Company) to attend and vote at the EGM 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.

4. 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 EGM or any adjournment thereof.

5. Shareholders who intend to attend the EGM in person or by proxy should complete and return the signed reply slip for attending the EGM to the registered address of the Company on or before 28 November 2008 personally or by mail or fax.

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NOTICE OF EGM

1. Shareholders or their proxies shall produce their proofs of identity when attending the EGM. A proxy of shareholder who is appointed to attend the EGM shall produce the proxy form at the same time.

2. The EGM is expected to last for one day. Shareholders and proxies attending the EGM should be responsible for their own traveling and accommodation expenses.

3. 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: (86379) 6390 8588 Fax: (86379) 6325 1984

1. 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.

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