SPT Energy Group Inc. — M&A Activity 2008

Feb 12, 2008

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

HENSIL INVESTMENTS GROUP LIMITED 興兆投資集團有限公司

(Incorporated in the British Virgin Islands with limited liability)

WING SHAN INTERNATIONAL LIMITED 榮山國際有限公司

(Incorporated in Hong Kong with limited liability) (Stock Code : 570)

JOINT ANNOUNCEMENT

(1) ACQUISITION OF SHARES IN WING SHAN INTERNATIONAL LIMITED BY HENSIL INVESTMENTS GROUP LIMITED;

(2) MANDATORY UNCONDITIONAL CASH OFFERS BY

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ON BEHALF OF HENSIL INVESTMENTS GROUP LIMITED FOR ALL THE ISSUED SHARES IN WING SHAN INTERNATIONAL LIMITED

(OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY HENSIL INVESTMENTS GROUP LIMITED AND PARTIES ACTING IN CONCERT WITH IT)

AND

FOR THE CANCELLATION OF ALL OUTSTANDING OPTIONS OF WING SHAN INTERNATIONAL LIMITED; AND

(3) RESUMPTION OF TRADING IN THE SHARES

The Agreement

After the trading hours of the Stock Exchange on 4 February 2008, the Offeror and the Vendor entered into the Agreement, pursuant to which the Offeror had agreed to acquire, and the Vendor had agreed to sell, the Sale Shares for a total consideration of HK$66,745,088.51, representing HK$0.23 per Sale Share. The Sale Shares represent approximately 34.92% of the existing issued share capital of the Company. Completion of the Agreement took place immediately following the signing of the Agreement.

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Mandatory unconditional cash offers

Prior to Completion, save for the Offeror’s interest in 315,000,000 Shares (representing approximately 37.91% of the existing issued share capital of the Company), neither the Offeror nor any of the parties acting in concert with it has any other interests in the share capital or voting rights of the Company. As a result of the acquisition of the Sale Shares, the Offeror and parties acting in concert with it have become interested in a total of 605,196,037 Shares, representing approximately 72.83% of the existing issued share capital of the Company. Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make a mandatory unconditional general offer in cash for all the issued Shares other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it. As at the date hereof, Options granted under the Share Option Scheme which entitle the holders thereof to subscribe for an aggregate of 2,484,000 Option Shares at a subscription price of HK$0.434 per Share remain outstanding. Pursuant to Rule 13.5 of the Takeovers Code, the Offeror is also required to make a comparable cash offer for all the outstanding Options.

Optima Capital has been appointed as the financial adviser to the Offeror to make the Offers on behalf of the Offeror on the following terms:

For every Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.23 in cash

For cancellation of every Option

carrying right to subscribe for one Option Share . . . . . . . . . . . . . . . . . . . . . . . . HK$0.0001 in cash

As the subscription price of each Option Share is higher than the Share Offer Price of HK$0.23, the Options are out of money when compared to the Share Offer Price. In the circumstances, the Option Offer will be made only at a nominal price of HK$0.0001 for the cancellation of Option in respect of one Option Share.

Further terms of the Offers are set out in the section headed “Mandatory unconditional cash offers” in this announcement.

Based on the issued share capital of the Company of 830,974,244 Shares as at the date hereof, there are 225,778,207 Shares subject to the Share Offer, representing approximately 27.17% of the existing issued share capital of the Company. The Share Offer is valued at approximately HK$51.9 million based on the Share Offer Price of HK$0.23 per Offer Share. However, if all the Options are exercised before the close of the Share Offer, the total number of Shares subject to the Share Offer will be 228,262,207 Shares and the Share Offer will be valued at approximately HK$52.5 million based on the Share Offer Price of HK$0.23 per Offer Share. The Option Offer Price of HK$0.0001 for cancellation of the Option in respect of each Option Share values the Option Offer at HK$248.40 in total. Optima Capital is satisfied that sufficient financial resources are available to the Offeror to meet acceptances in full of the Offers.

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Establishment of Independent Board Committee and appointment of Independent Financial Adviser

An independent committee of the Board comprising all the independent non-executive Directors has been established to consider the Offers and to advise the Independent Shareholders in relation thereon. Kingsway has been appointed by the Company to advise the Independent Board Committee regarding the terms of the Offers. The appointment of the Independent Financial Adviser has been approved by the Independent Board Committee. A letter of advice of the Independent Financial Adviser will be included in the composite document referred to below.

Composite document

It is the intention of the Offeror and the Company that a composite document combining the offer document and the offeree board circular will be jointly despatched by the Offeror and the Company to the Independent Shareholders in accordance with the requirements of the Takeovers Code. The composite document will set out details of the Offers (attaching thereto the acceptance and transfer forms) and incorporate the respective letters of advice from the Independent Board Committee and the Independent Financial Adviser on the Offers and other relevant information on the Group as required under the Takeovers Code.

Resumption of trading

At the request of the Company, trading in the Shares has been suspended with effect from 9:30 a.m. on 5 February 2008 pending the release of this announcement. An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 13 February 2008.

THE AGREEMENT

Date 4 February 2008

Parties

Vendor: Madam Yip Siu Chun

Purchaser: Hensil Investments Group Limited, which is a wholly-owned subsidiary of Foshan Development

Subject of the sale and purchase

The Sale Shares, being 290,196,037 Shares and representing approximately 34.92% of the existing issued share capital of the Company.

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Prior to the Agreement, both the Vendor and the Purchaser were Shareholders, with the Vendor holding 290,196,037 Shares and the Purchaser holding 315,000,000 Shares, which represent approximately 34.92% and 37.91% respectively of the existing issued share capital of the Company. Pursuant to the Agreement, the Vendor has disposed of all of her interests in the issued share capital of the Company to the Offeror. Save for her interests in the Company as a substantial Shareholder prior to the Agreement, the Vendor is otherwise a third party independent of the Company and its connected persons. Information on the Offeror is set out in the section headed “Information on the Offeror” below.

The total consideration for the Sale Shares is HK$66,745,088.51 (equivalent to HK$0.23 per Sale Share) which was agreed between the Vendor and the Offeror after arm’s length negotiations and paid by the Offeror in full in cash at Completion. Completion of the Agreement has taken place on 4 February 2008 immediately after the signing of the Agreement.

The Sale Shares were acquired free from Encumbrances and together with all rights and benefits attaching or accruing thereto including all dividends and distributions declared, made or paid on or after the date of the Agreement.

MANDATORY UNCONDITIONAL CASH OFFERS

Prior to Completion, save for the Offeror’s interest in 315,000,000 Shares (representing approximately 37.91% of the existing issued share capital of the Company), neither the Offeror nor any of the parties acting in concert with it has any other interests in the share capital or voting rights of the Company. As a result of the acquisition of the Sale Shares, the Offeror and parties acting in concert with it have become interested in a total of 605,196,037 Shares, representing approximately 72.83% of the existing issued share capital of the Company. Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make a mandatory unconditional general offer in cash for all the issued Shares other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it.

As at the date hereof, the Company has 830,974,244 Shares in issue. Accordingly, there are a total of 225,778,207 Shares subject to the Share Offer (assuming no Options are exercised before the close of the Share Offer). As at the date hereof, Options granted under the Share Option Scheme which entitle the holders thereof to subscribe for an aggregate of 2,484,000 Option Shares at a subscription price of HK$0.434 per Share remain outstanding. The Options are exercisable by the holders thereof at any time on or before 1 January 2013. Pursuant to Rule 13.5 of the Takeovers Code, the Offeror is also required to make a comparable cash offer for all the outstanding Options.

Save as disclosed above, as at the date of the Agreement and the date hereof, the Company does not have any other outstanding options, derivatives, warrants or securities which are convertible or exchangeable into Shares.

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Principal terms of the Offers

Optima Capital, the financial adviser to the Offeror, will make the Offers, which are unconditional in all respects, on behalf of the Offeror in compliance with the Takeovers Code on the terms as follows:-

The Share Offer

For every Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.23 in cash

The Offer Shares to be acquired under the Share Offer shall be fully paid and free from Encumbrances and together with all rights attaching to them as at the date hereof, including all dividends and distributions declared, made or paid on or after the date hereof.

The Option Offer

For cancellation of each Option carrying

right to subscribe for one Option Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.0001 in cash

Any holder of the Options accepting the Option Offer in respect of all or part of their Options will surrender and give up the subscription rights attaching to the relevant Options.

Pursuant to the Share Option Scheme, in the case that a general offer is made to the Shareholders, the holder of the Options will be entitled by notice in writing to the Company to exercise the Options (to the extent which has become exercisable on the date of such notice and not already exercisable) in full or to the extent specified in such notice at any time within 14 days after the date on which the offer becomes or is declared unconditional, after which the Options shall lapse according to the terms of the Share Option Scheme.

Basis of the Share Offer Price and Option Offer Price

The Share Offer Price is the same as the price per Sale Share paid by the Offeror under the Agreement.

The Option Offer Price of HK$0.0001 for every Option is nominal in value, and is arrived at with reference to the Share Offer Price of HK$0.23 per Offer Share and the subscription price of HK$0.434 per Option Share. As the subscription price of each Option Share is higher than the Share Offer Price of HK$0.23, the Options are out of money when compared to the Share Offer Price. In the circumstances, the Option Offer will be made only at a nominal price of HK$0.0001 for the cancellation of the Option in respect of one Option Share.

Comparison of value

The Share Offer Price of HK$0.23 per Offer Share represents:

• (i) a discount of approximately 34.29% to the closing price of HK$0.35 per Share as quoted on the Stock Exchange on the Last Trading Day;

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• (ii) a discount of approximately 34.29% to the average of the closing prices of the Shares as quoted on the Stock Exchange for the 5 trading days up to and including the Last Trading Day of HK$0.35 per Share;

• (iii) a discount of approximately 34.29% to the average of the closing prices of the Shares as quoted on the Stock Exchange for the 10 trading days up to and including the Last Trading Day of HK$0.35 per Share;

• (iv) a discount of approximately 34.29% to the audited consolidated total equity attributable to Shareholders of approximately HK$0.35 per Share as at 31 December 2006; and

• (v) a discount of approximately 37.84% to the unaudited consolidated total equity attributable to Shareholders of approximately HK$0.37 per Share as at 30 June 2007.

Highest and lowest Share prices

The highest and lowest closing prices of the Shares as quoted on the Stock Exchange during the sixmonth period preceding the Last Trading Day were HK$0.74 per Share on 14 August 2007 and HK$0.31 per Share on 22 January 2008 respectively.

Value of the Offers

On the basis of the Share Offer Price of HK$0.23 per Offer Share, the entire existing issued share capital of the Company of 830,974,244 Shares is valued at approximately HK$191.1 million. There are 225,778,207 Shares subject to the Share Offer (assuming none of the Options is exercised prior to the close of the Share Offer). According to this, the Share Offer is valued at approximately HK$51.9 million based on the Share Offer Price. If all the Options are exercised before the close of the Share Offer, the total number of Shares subject to the Share Offer will be 228,262,207 Shares and the Share Offer will be valued at approximately HK$52.5 million based on the Share Offer Price of HK$0.23 per Offer Share. The Option Offer Price of HK$0.0001 for cancellation of the Option in respect of one Option Share values the Option Offer at HK$248.40 in total.

Financial resources available to the Offeror

Optima Capital is satisfied that sufficient financial resources are available to the Offeror to meet acceptances in full of the Offers.

Stamp duty

Seller’s ad valorem stamp duty payable by the Independent Shareholders who accept the Share Offer and calculated at a rate of 0.1% of the market value of the Offer Shares or consideration payable by the Offeror in respect of the relevant acceptances of the Share Offer, whichever is higher, will be deducted from the amount payable by the Offeror to the relevant Shareholder on acceptance of the Share Offer. The Offeror will arrange for payment of the seller’s ad valorem stamp duty on behalf of the accepting Shareholders and will pay the buyer’s ad valorem stamp duty in connection with the acceptance of the Share Offer and the transfer of the Shares.

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As the Option Offer does not involve the sale and purchase of Hong Kong stock, no stamp duty will be payable pursuant to the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong) upon the cancellation of any Options as a result of acceptance by holder(s) of Options of the Option Offer.

Payment

Payment in cash in respect of acceptances of the Offers will be made as soon as practicable but in any event within 10 days of the date on which the relevant documents of title are received by the Offeror to render each such acceptance complete and valid.

Other arrangements

As at the date hereof,

• (i) neither the Offeror nor any of the parties acting in concert with it has received any irrevocable commitment to accept the Offers;

• (ii) there is no outstanding derivative in respect of the securities in the Company which has been entered into by the Offeror or any person acting in concert with it;

• (iii) there is no arrangement (whether by way of option, indemnity or otherwise) in relation to the shares of the Offeror or the Company and which might be material to the Offers; and

• (iv) the Offers are unconditional in all respects. There is no agreement or arrangement to which the Offeror is a party which relates to circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Offers.

INFORMATION ON THE COMPANY

The principal activity of the Company is investment holding. The principal activities of its subsidiaries are the manufacture and sale of Chinese medicine and pharmaceutical products in the PRC. Prior to October 2006, the principal business of the Group was the generation and sale of electricity in Foshan City, Guangdong Province, the PRC, which had caused substantial losses to the Group for 4 consecutive years up to the financial year of 2006. With a view to improving the operating results of the Group, the Group acquired its existing Chinese medicine business in October 2006 through the acquisition from Foshan Development of a 51% equity interest in each of Foshan Dezhong Pharmaceutical Co., Ltd. and Foshan Feng Liao Xing Pharmaceutical Co., Ltd. In December 2006, the Group disposed of its then loss making electricity generation business to Foshan Development when there was no sign of the fuel oil prices easing off, which had burdened the Group and resulted in an escalating cost of production and greater operating losses, as the on-grid tariff adjustments permitted by the relevant government authorities could not catch up with the escalating fuel oil costs. As a result of the aforesaid transactions, the core business of the Group at present is in pharmaceutical business in the PRC.

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For the year ended 31 December 2005, the Group recorded audited loss of approximately HK$807.2 million, of which approximately HK$762.6 million was attributable to the Shareholders and approximately HK$44.6 million was attributable to minority interests. The loss for the financial year of 2005 was attributable to the then electricity generation business of the Group. For the year ended 31 December 2006, the Group recorded audited loss of approximately HK$431.7 million, which comprised loss from the discontinued operation in the electricity generation business of approximately HK$425.3 million and loss from the continuing operation of approximately HK$6.4 million. The new pharmaceutical business of the Group contributed a profit from operation of approximately HK$9.4 million to the Group since it became part of the Group in October 2006. After netting off the Group’s full year administrative expenses attributable to the Hong Kong head office of approximately HK$8.9 million, the profit from operation for the financial year of 2006 was reduced to approximately HK$0.5 million. The aforesaid loss of HK$6.4 million generated by the continuing operation for the financial year of 2006 was attributable to finance costs of HK$6.4 million, of which HK$6.1 million was a one-off interest expense and early redemption cost on convertible notes issued and redeemed in the year.

For the six months ended 30 June 2007, the Group had turned into the black and recorded unaudited profit of approximately HK$8.2 million, of which approximately HK$2.3 million was attributable to Shareholders, and approximately HK$5.9 million was attributable to minority interests. The profit for the period was contributed by the new pharmaceutical business.

The audited consolidated total equity attributable to Shareholders as at 31 December 2006 was HK$293.3 million, representing approximately HK$0.35 per Share. The unaudited consolidated total equity attributable to Shareholders as at 30 June 2007 was approximately HK$305.7 million, representing approximately HK$0.37 per Share.

SHAREHOLDING STRUCTURES

Set out below are the respective shareholding structures of the Company immediately before Completion and as at the date of this announcement:

Non-public Shareholders The Offeror and parties acting in concert with it The Vendor Mr. Ng Pui Cheung, Joseph_(Note)_ Subtotal Public Shareholders Total	Immediately before Completion Number of Shares % 315,000,000 37.91 290,196,037 34.92 300,000 0.04 605,496,037 72.87 225,478,207 27.13 830,974,244 100.00	As at the date of this announcement Number of Shares % 605,196,037 72.83 – 0 300,000 0.04 605,496,037 72.87 225,478,207 27.13 830,974,244 100.00	As at the date of this announcement Number of Shares % 605,196,037 72.83 – 0 300,000 0.04 605,496,037 72.87 225,478,207 27.13 830,974,244 100.00
			72.87 27.13
			100.00

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Note: Mr. Ng Pui Cheung, Joseph is an independent non-executive Director and his shareholding is therefore not counted as public shareholding.

Save for the shareholding of the Offeror as stated above, neither the Offeror nor any of the parties acting in concert with it has any other interests in the share capital, convertible securities, warrants or options of the Company. The Offeror and parties acting in concert with it have not dealt in the Shares from 5 August 2007 (being six months prior to the Last Trading Day) to the date hereof.

INFORMATION ON THE OFFEROR

The Offeror is a controlling Shareholder and connected person of the Company. It is an investment holding company and wholly owned by Foshan Development. The entire issued share capital of Foshan Development is held by Mr. He Haochang and Mr. Ou Guanghan on trust for the Foshan Municipal People’s Government. The principal activity of the Offeror is investment holding and the principal assets held by the Offeror are its equity interests in the Company. As at the date hereof, the board of directors of the Offeror comprises Mr. He Haochang and Mr. Ou Guanghan.

OFFEROR’S INTENTION ON THE GROUP

The Offeror intends that the Group will continue its existing principal activities. The Offeror does not intend to introduce any major changes to the existing operating and management structure of the Company, or to discontinue the employment of any employees of the Company, as a result of the Offers. At present, there is no plan for the Offeror to redeploy any fixed assets of the Group other than in its ordinary course of business. The Offeror also expects that there will be no material change to the existing business of the Company as a result of the Offers. The Offeror does not intend to propose any change to the existing composition of the Board.

LISTING STATUS OF THE COMPANY

The Offeror intends to maintain the listing of the Shares on the Stock Exchange after the close of the Offers. The directors of the Offeror will jointly and severally undertake to the Stock Exchange to take appropriate steps to ensure that sufficient public float exists in the Shares after the close of the Offers.

The Stock Exchange has stated that if, at the close of the Offers, less than the minimum prescribed percentage applicable to the Company, being 25% of the issued Shares, are held by the public, or if the Stock Exchange believes that:

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

• there are insufficient Shares in public hands to maintain an orderly market;

it will consider exercising its discretion to suspend dealings in the Shares.

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INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

Rule 2.8 of the Takeovers Code requires the Company to establish an independent committee of the Board to advise the Independent Shareholders on the Offers and that such independent committee should comprise all non-executive Directors who have no direct or indirect interest in the Offers other than as a Shareholder. The Company has 4 non-executive Directors, namely Messrs Du Richeng, Chan Ting Chuen, David, Ng Pui Cheung, Joseph and Cheung Kin Piu, Valiant. Mr. Du Richeng was appointed as a non-executive Director and the Chairman of the Board with effect from 1 January 2008. Before this, Mr. Du was an executive Director from 14 April 1998 to 8 February 2001 and was the vice-chairman and managing director of Foshan Development from November 1996 to January 2001. Mr. Du is the chairman of 佛山市公用事業控股有限公司 (Foshan Public Utilities Holding Co., Ltd.) from July 2006 up to now. In view of Mr. Du’s past relationship with Foshan Development, the Directors consider that it would be more appropriate that Mr. Du does not sit on the independent committee of the Board for the purpose of the Offers. Accordingly, the Independent Board Committee comprising all of the 3 independent non-executive Directors, namely Messrs Chan Ting Chuen, David, Ng Pui Cheung, Joseph and Cheung Kin Piu, Valiant, has been established to consider the Offers and advise the Independent Shareholders accordingly.

Kingsway has been appointed by the Company to advise the Independent Board Committee regarding the terms of the Offers, which appointment has been approved by the Independent Board Committee.

DEALING DISCLOSURE

Stockbrokers, banks and others who deal in relevant securities on behalf of clients have a general duty to ensure, so far as they are able, that those clients are aware of the disclosure obligations attaching to associates and other persons under Rule 22 of the Takeovers Code and that those clients are willing to comply with them. Principal traders and dealers who deal directly with investors should, in appropriate cases, likewise draw attention to the relevant rules of the Takeovers Code. However, this does not apply when the total value of dealings (excluding stamp duty and commission) in any relevant security undertaken for a client during any 7-day period is less than HK$1 million.

This dispensation does not alter the obligation of principals, associates and other persons themselves to initiate disclosure of their own dealings, whatever total value is involved.

Intermediates are expected to co-operate with the Executive in its dealings enquiries. Therefore, those who deal in relevant securities should appreciate that stockbrokers and other intermediates will supply the Executive with relevant information as to those dealings, including identities of clients, as part of that co-operation.

Any associates of the Company, the Offeror and parties acting in concert with them are reminded to disclose their dealings in any securities of the Company.

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GENERAL

Rule 8.2 of the Takeovers Code provides that an offer document should normally be posted by or on behalf of the Offeror within 21 days of the date of announcement of the Offers. The Company is required to send an offeree board circular in relation to the Offers to the Shareholders within 14 days of the posting of the offer document or such later date as the Executive may approve. It is the intention of the Offeror and the Company that a composite document combining the offer document and the offeree board circular will be jointly despatched by the Offeror and the Company to the Independent Shareholders in accordance with the requirements of the Takeovers Code. The composite document will set out details of the Offers (attaching thereto the acceptance and transfer forms) and incorporate the respective letters of advice from the Independent Board Committee and the Independent Financial Adviser on the Offers and other relevant information on the Group as required under the Takeovers Code.

SUSPENSION AND RESUMPTION OF TRADING

At the request of the Company, trading in the Shares has been suspended with effect from 9:30 a.m. on 5 February 2008 pending the release of this announcement. An application has been made by the Company to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 13 February 2008.

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise.

“Agreement” the sale and purchase agreement dated 4 February 2008 entered into between the Offeror and the Vendor in relation to the sale and purchase of the Sale Shares

• “associate” has the same meanings as given to it in the Listing Rules

• “Board” the board of Directors

• “Company” Wing Shan International Limited, a company incorporated in Hong Kong with limited liability, the issued Shares of which are listed on the Main Board of the Stock Exchange

• “Completion” completion of the Agreement

• “connected person” has the meaning as given to it in the Listing Rules

• “Directors” directors of the Company

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• “Encumbrances” means any mortgage, charge, pledge, lien, hypothecation, encumbrance or other security arrangement of any kind; any option, equity, claim, adverse interest or other third party right (including pre-emptive right) of any kind; any arrangement by which any right is subordinated to any right of such third party; or any contractual right of set-off, including any agreement or commitment to create or procure to create, or to permit or suffer to be created or subsisted any of the above

• “Executive” the Executive Director of the Corporate Finance Division of the SFC or any delegates of the Executive Director

• “Foshan Development” Foshan Development Company Limited, a company incorporated in Hong Kong with limited liability and the holding company of the Offeror

• “Group” the Company and its subsidiaries

• “Hong Kong” Hong Kong Special Administrative Region of the PRC

• “Independent Board Committee” the independent board committee of the Company comprising all the independent non-executive Directors formed to advise the Independent Shareholders on the Offers

• “Independent Financial Kingsway Capital Limited, a licensed corporation under the SFO Adviser” or “Kingsway” permitted to engage in type 6 (advising on corporate finance) regulated activity, and the independent financial adviser appointed to advise the Independent Board Committee regarding the Offers

• “Independent Shareholders” Shareholders other than the Offeror and parties acting in concert with it as regards the Offers

• “Last Trading Day” 4 February 2008, being the last trading day of the Shares prior to the suspension in trading of the Shares on the Stock Exchange at 9:30 a.m. on 5 February 2008

• “Listing Rules”

the Rules Governing the Listing of Securities on the Stock Exchange

• “Offer Share(s)” Share(s) in respect of which the Share Offer is made, being Share(s) not already owned or agreed to be acquired by the Offeror and parties acting in concert with it

“Offeror” or “Purchaser” Hensil Investments Group Limited, a company incorporated in the British Virgin Islands with limited liability

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“Offers”

the Share Offer and the Option Offer

“Optima Capital”

Optima Capital Limited, a licensed corporation under the SFO permitted to engage in type 1 (dealings in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities, and the financial adviser to the Offeror

“Option(s)” the option(s) granted under the Share Option Scheme which are outstanding as at the date hereof and entitle the holders thereof to subscribe for an aggregate of 2,484,000 Shares at a subscription price of HK$0.434 per Share

“Option Offer” the mandatory unconditional cash offer to be made by Optima Capital on behalf of the Offeror for the cancellation of all Options in accordance with the Takeovers Code “Option Offer Price” the price at which the Option Offer will be made, being HK$0.0001 for the cancellation of Option relating to one Option Share “Option Share(s)” the new Share(s) which may fall to be issued upon the exercise by the holders of the Options of the subscription rights attaching to the Options at a price of HK$0.434 per Share “PRC” the People’s Republic of China “Sale Shares” the 290,196,037 Shares acquired by the Offeror from the Vendor pursuant to the terms and conditions of the Agreement “SFC” Securities and Futures Commission of Hong Kong “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Share(s)” ordinary share(s) of HK$0.10 each in the issued share capital of the Company “Shareholder(s)” holder(s) of the Share(s) “Share Offer” the mandatory unconditional cash offer to be made by Optima Capital on behalf of the Offeror for all the Shares other than those already owned by or agreed to be acquired by the Offeror and parties acting in concert with it in accordance with the Takeovers Code “Share Offer Price” the price at which the Share Offer will be made, being HK$0.23 per Offer Share

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“Share Option Scheme”

the share option scheme of the Company adopted on 22 May 2002 and amended on 29 May 2006

“Stock Exchange” The Stock Exchange of Hong Kong Limited “Takeovers Code” the Hong Kong Code on Takeovers and Mergers “Vendor” Madam Yip Siu Chun “HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent.

By Order of the board of directors of By Order of the Board Hensil Investments Group Limited Wing Shan International Limited He Haochang Lam Siu Hung Director Managing Director

Hong Kong, 12 February 2008

All Directors jointly and severally accept full responsibility for the accuracy of the information contained in this announcement (other than the information relating to the Offeror and its future intention), and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement (other than those relating to the Offeror and its future intention) have been arrived at after due and careful consideration and there are no other facts not contained in this announcement (other than those relating to the Offeror and its future intention) the omission of which would make any such statement contained in this announcement misleading.

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

As at the date hereof, the Board comprises 7 Directors, of which Mr. Du Richeng is non-executive Director, Mr. Lam Siu Hung, Mr. Situ Min and Mr. Li Songquan are executive Directors, and Mr. Chan Ting Chuen, David, Mr. Ng Pui Cheung, Joseph and Mr. Cheung Kin Piu, Valiant are independent nonexecutive Directors.

As at the date hereof, the board of directors of the Offeror comprises Mr. He Haochang and Mr. Ou Guanghan.

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