Television Broadcasts Limited — Capital/Financing Update 2008

May 30, 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.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the shares of China Conservational Power Holdings Limited.

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 290)

(1) VERY SUBSTANTIAL ACQUISITION OF 51% OF THE ISSUED SHARE CAPITAL OF EXCALIBUR SECURITIES LIMITED INVOLVING ISSUE OF CONVERTIBLE BONDS (2) PLACING OF CONVERTIBLE BONDS (3) PROPOSED INCREASE IN AUTHORIZED SHARE CAPITAL AND

(4) PROPOSED ISSUE OF REMUNERATION SHARES AND REMUNERATION WARRANTS

Financial adviser to the Company

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ACQUISITION

On 27 February 2008, the Vendor and the Purchaser entered into the S&P Agreement (as amended on 30 May 2008) whereby the Vendor agreed to sell or procure the sale to the Purchaser and the Purchaser agreed to purchase the Sale Shares at HK$20,000,000. The Consideration will be settled by way of the Company issuing upon Completion the Consideration CB for a principal amount of HK$20 million to the Vendor.

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The Acquisition constitutes a very substantial acquisition for the Company under Chapter 14 of the Listing Rules. A circular containing, amongst other things, further details of the Acquisition will be despatched to the Shareholders as soon as practicable.

PLACING OF THE CONVERTIBLE BONDS

On 27 February 2008, the Company entered into the Placing Agreement (as amended on 30 May 2008) with the Placing Agent in respect of the conditional placing of the Placing CB of principal amount of HK$50 million with zero coupon due in three years from the date of issue. The Placing Agreement is conditional on, among other things, the Stock Exchange having agreed in principle for the resumption of trading of the Shares on the Stock Exchange.

PROPOSED INCREASE IN AUTHORIZED SHARE CAPITAL

The Board also proposes the increase in authorized share capital from HK$100,000,000 divided into 1,000,000,000 ordinary Shares of HK$0.10 each to HK$500,000,000 divided into 5,000,000,000 ordinary Shares of HK$0.10 each by the creation of an additional 4,000,000,000 ordinary Shares of HK$0.10 each. Such new Shares, upon issue, shall rank pari passu in all respects with the then existing issued Shares. The proposed increase in authorized share capital of the Company is a condition to the completion of both the S&P Agreement and the Placing Agreement.

PROPOSED ISSUE OF REMUNERATION SHARES AND REMUNERATION WARRANTS

Pursuant to the engagement letter dated 15 April 2008 entered into between the Company and Veda Capital and having considered the financial position of the Group, it was agreed between the Company and Veda Capital that part of the professional fees of HK$1,200,000 charged by Veda Capital may be settled by the issue of the Remuneration Shares to Veda Capital (or its nominee(s)) at an issue price of HK$0.1 per new Share upon the approval by the Stock Exchange on the resumption of trading in the Shares, which is equivalent to the Consideration Conversion Price and Placing Conversion Price. The Company also agreed to grant the Remuneration Warrants to Veda Capital (or its nominee(s)) upon the approval by the Stock Exchange on the resumption of trading in the Shares, which entitle Veda Capital (or its nominee(s)) to subscribe for 12,000,000 new Shares at the exercise price of HK$0.10 per Share (subject to adjustments), at any time between the date of issue of the Remuneration Warrants and 36 months thereafter.

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SUSPENSION OF TRADING

Trading in the Shares was suspended with effect from 9:30 a.m. on 29 September 2005 at the request of the Company and will remain suspended until further notice.

THE ACQUISITION

Date:

27 February 2008 (as amended on 30 May 2008)

Parties: (1) The Vendor

(2) The Purchaser

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiry, the Vendor is a third party independent of the Company and its connected persons. The Vendor is a businessman with investment in land and building. The Vendor was introduced to the Directors through a director of Excalibur. According to the information provided by the Vendor, currently Excalibur is owned by Pioneer (China) Limited (“Pioneer”), which in turn is owned as to approximately 50.92% by the Vendor and as to the remaining approximately 49.08% by an Independent Third Party (the “Other Pioneer Shareholder”). The Vendor and the Other Pioneer Shareholder, together being interested in 100% of the issued share capital of Pioneer, had an arrangement in place and had given a written confirmation on the transfer of 51% of the issued share capital of Excalibur to the Purchaser upon Completion, i.e. approximately 25.97% and approximately 25.03% of the attributable interests in Excalibur will be disposed of by the Vendor and the Other Pioneer Shareholder respectively through Pioneer to the Purchaser upon Completion. The Vendor and the Other Pioneer Shareholder also confirmed that the Consideration CB (please refer to the section headed “The Consideration CB” below for details) would only be issued to the Vendor by the Company upon Completion.

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Subject matter:

Conditions:

The Vendor has agreed to sell or procure the sale and the Purchaser has agreed to purchase the Sale Shares at HK$20,000,000.

Completion of the S&P Agreement is conditional on the following conditions being fulfilled or waived (1) on or before the Long Stop Date (or such later date as the Vendor and the Purchaser may agree), as to the following conditions other than conditions (g), (h) and (i); and (2) on the Completion Date, as to conditions (g), (h) and (i):

• (a) the result of a legal and financial due diligence exercise to be carried out by the Purchaser on Excalibur (including but not limited to the recoverability of account receivables, the assets, liabilities and business of Excalibur and in relation thereto on the books, records, constitutional documents, contracts, accounting records and any other documents relating to Excalibur) being satisfactory to the Purchaser (in its absolute discretion) and written notice to that effect having been given to the Vendor;

• (b) all necessary consents, confirmations, permits, approvals, licences and authorisations having been obtained from all relevant governmental, regulatory and other authorities, agencies and departments in Hong Kong (including but not limited to the SFC and the Stock Exchange) in connection with the transactions contemplated under the S&P Agreement, the implementation of and all other matters incidental to the S&P Agreement (including the non-revocation of the Trading Right and the Exchange Participantship held by Excalibur as a result of the transactions contemplated under the S&P Agreement and all the conditions and requirements as the SFC and the Stock Exchange shall stipulate in relation to the Trading Right and the Exchange Participantship held by Excalibur respectively having been duly complied with);

• (c) the passing by the Shareholders in general meeting of the necessary resolutions approving the increase of the authorised share capital of the Company to HK$500,000,000 divided into 5,000,000,000 Shares;

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• (d) the Stock Exchange having agreed in principle for the resumption of trading in the Shares on the Stock Exchange, either unconditionally or subject to conditions to which neither the Vendor nor the Company reasonably objects and such conditions (if any) having been satisfied;

• (e) (i) the passing by the Shareholders in general meeting of the necessary resolutions approving the S&P Agreement, the issue of the Consideration CB and the Consideration Conversion Shares, and other transactions contemplated in or incidental to the S&P Agreement in accordance with the Listing Rules; and

• (ii) the Stock Exchange having granted approval for the issue, listing of and permission to deal in the Consideration Conversion Shares either unconditionally or subject to conditions to which neither the Vendor nor the Company reasonably objects and such conditions (if any) having been satisfied;

• (f) all other necessary waivers, consents and approvals (if required) in relation to the Purchaser, its holding company(ies) and its (their) shareholders and directors from the relevant governmental or regulatory authorities in Hong Kong (including the Stock Exchange) and other applicable jurisdictions required for the S&P Agreement, the increase in authorised share capital of the Company and the transactions contemplated therein being obtained;

• (g) all warranties remaining true and accurate as at Completion and the Vendor shall have performed or complied, in all material respects, with its covenants and agreements contained herein and required to be performed or complied with by the Vendor at or prior to the Completion Date;

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• (h) the completion of the unaudited balance sheet of the Company as at the Completion Date, which shall not be objected by the Purchaser in its absolute discretion (for which the Vendor shall provide promptly explanations (where applicable, with documentary support) in respect of questions or queries the Purchaser may have thereon); and

• (i) the Placing Agreement becoming unconditional and Completion takes place simultaneously with completion of the Placing Agreement.

Consideration:

The Consideration was determined after arm’s length negotiation between the Vendor and the Purchaser and the basis of determining and arriving at the Consideration was by making reference of the unaudited financial position and performance of Excalibur for the year ended 31 December 2007 to market comparables of price earnings ratios and price to book ratios of securities companies listed on the Stock Exchange. The Board has also considered the future prospects of Excalibur to the Company as a whole as set out in the section headed “Reasons for and benefits of the Acquisition”. Based on the unaudited financial statements of Excalibur for the year ended 31 December 2007 and the Acquisition of 51% of Excalibur, the Consideration represents a price earnings multiple of approximately 7.2 times and a price to book ratio of approximately 1.31 times. The price earnings ratios of the listed securities companies in Hong Kong ranged from approximately 4.23 times to 30.84 times with an average of approximately 19 times as at the date of the S&P Agreement whereas the price to book ratios of the listed securities comparables in Hong Kong ranged from approximately 0.98 times to approximately 4.20 times with an average of approximately 1.81 times as at the date of the S&P Agreement.

The Consideration shall be HK$20,000,000, which shall be satisfied by the issue of the Consideration CB by the Company to the Vendor on Completion.

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Completion:

Completion of the Acquisition is expected to take place on the third Business Day after all the conditions (other than conditions (g), (h) and (i)) set out above have been fulfilled or at such other date as the Vendor and the Purchaser may agree. After Completion, Excalibur will become a non-wholly owned subsidiary of the Company. The financial statements of Excalibur will be consolidated in the accounts of the Group after Completion.

The Company has no current intention to appoint or propose the Vendor or any of his associates to be a director of the Company or any of its subsidiaries, including Excalibur which would become a subsidiary of the company upon Completion.

The Consideration CB

The following is a summary of the key terms of the Consideration CB:–

Issuer:	the Company
Initial noteholder:	the Vendor
Amount:	HK$20 million
Issue price:	100% of the principal amount of the Consideration CB
Interest rate:	0%
Conversion:	Noteholders have the right to convert on any Business Day from
	the date of issue of the Consideration CB but prior to 5 Business
	Days prior to the maturity date, the whole or any part(s) of the
	principal amount of the Consideration CB provided that such part
	of the principal amount of the Consideration CB to be converted
	shall not be less than HK$100,000 at any one time (save that if at
	any time the principal outstanding amount shall be less than
	HK$100,000, the whole (but not part only) of the principal amount
	of the Consideration CB may be converted)

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Redemption:

Maturity date:

• Consideration Conversion Price:

Unless previously converted, the Consideration CB shall be redeemed by the Company at it principal amount outstanding on the maturity date of the Consideration CB

The date falling on the third anniversary of the date of issue of the Consideration CB

HK$0.10 per Consideration Conversion Share, subject to adjustments in each of the following cases (details provisions are set out in the terms and conditions of the Consideration CB):

• (a) an alteration of the nominal amount of the Shares by reason of any consolidation or subdivision;

• (b) an issue (other than in lieu of a cash dividend) by the Company of Shares credited as fully paid by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve fund);

• (c) a capital distribution being made by the Company, whether on a reduction of capital or otherwise, to the Shareholders in their capacity as such or rights being granted to Shareholders to acquire for cash assets of the Group;

• (d) an offer or grant being made by the Company to the Shareholders by way of rights or of options or warrants to subscribe for or purchase Shares at a price which is less than 90% of the market price;

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• (e) an issue wholly for cash being made by the Company of securities convertible into or exchangeable for or carrying rights of subscription for new Shares, if in any case the total effective consideration per Share initially receivable for such securities is less than the greater of either 90% of the market price or the Consideration Conversion Price in effect, or the terms of any such rights of conversion or exchange or subscription attached to any such securities being modified so that the said total effective consideration per Share initially receivable for such securities is less than the greater of either 90% of the market price or the Consideration Conversion Price in effect;

• (f) an issue being made by the Company wholly for cash of Shares (other than Shares issued pursuant to an employee share option scheme of the Company) at a price per Share less than the greater of either 90% of the market price or the Consideration Conversion Price in effect; and

• (g) an issue being made by the Company of Shares for the acquisition of asset at a total effective consideration per Share less than the greater of either 90% of the market price or the Consideration Conversion Price in effect.

The Consideration Conversion Price shall not be adjusted to below the nominal value of a Share from time to time.

The Consideration Conversion Price represents:

• (i) a discount of approximately 67.21% to the closing price of HK$0.305 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (ii) a discount of approximately 67.85% to the average of the closing prices of approximately HK$0.311 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the Last Trading Day;

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• (iii) a premium of approximately 105.76% over the unaudited consolidated net asset value of the Company per Share of approximately HK$0.0486 as at 30 September 2007;

• (iv) the nominal price of the Share of HK$0.10 each; and

• (v) the Placing Conversion Price.

The Board noted that the Shares had been suspended for almost 30 months since 29 September 2005 and with the tight financial position that the Company is facing, the Company has, upon arm’s length negotiation, agreed with the Vendor that the Consideration Conversion Price should represent a substantial discount to the closing price before suspension of the Shares so that the Consideration could be settled in full by issuing the Consideration CB to relief cashflow pressure on the Group while ascertaining the Acquisition.

Transferability:

The Consideration CB or any part(s) thereof may be assigned or transferred only with the prior written consent of the Company and subject to compliance of the conditions thereunder and further subject to the conditions, approvals, requirements and any other provisions of or under:–

• (a) the Stock Exchange (and any other stock exchange on which the Shares may be listed at the relevant time) or their rules and regulations;

• (b) the approval for listing in respect of the Consideration Conversion Shares; and

• (c) all applicable laws and regulations.

If the Consideration CB or any part(s) thereof shall be transferred to any company or other person which is a connected person of the Company, the Company shall promptly notify the Stock Exchange.

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Voting:

Ranking:

Noteholders shall not be entitled to receive notices of, attend or vote at any meetings of the Company by reason only of it being the noteholders.

The Consideration CB will rank pari passu with all other present and future unsecured and un-subordinated obligations of the Company except for obligations accorded preference by mandatory provisions of applicable laws.

The Consideration Conversion Shares to be issued as a result of the exercise of the conversion rights attached to the Consideration CB will rank pari passu in all respects with all other Shares in issue at the date on which the conversion rights attached to the Consideration CB are exercised.

• Limitation on conversion:

Events of Default:

• No conversion of the Consideration CB shall be made, if immediately upon such conversion, (1) the Vendor and/or parties acting in concert (as defined under the Takeovers Code) with the Vendor will be interested in 30% (or such amount as may from time to time specified in the Takeovers Code as being the level for triggering a mandatory general offer) or more of the then enlarged issued share capital of the Company or will be under an obligation to make a general offer under the Takeovers Code; or (2) the public float of the Company falls below 25% of the issued share capital of the Company.

The Consideration CB contains customary events of default provisions. Upon the happening of an event of default, noteholder(s) representing not less than 75% of the principal amount of the Consideration CB outstanding may give notice to the Company declaring the Consideration CB to be immediately due and payable.

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For illustration purpose only, the 200,000,000 Consideration Conversion Shares to be issued under the Consideration CB represents approximately 43.10% of the existing issued share capital of the Company, approximately 30.12% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Conversion Shares, assuming full conversion of the Consideration CB and the Consideration Conversion Shares were to be issued at the Consideration Conversion Price and approximately 17.18% of the issued share capital of the Company as enlarged by the allotment and issue of both the Consideration Conversion Shares and the Placing Conversion Shares, assuming full conversion of the Consideration CB and the Placing CB and the Consideration Conversion Shares were to be issued at the Consideration Conversion Price and the Placing Conversion Shares were to be issued at the Placing Conversion Price.

Notwithstanding the conversion rights attached to the Consideration CB, the terms of the Consideration CB provide that noteholders shall not convert the Consideration CB if as a result thereof, (i) the Vendor and parties acting in concert with it, will be interested in 30% (or such amount as may from time to time be specified in the Code as being the level for triggering a mandatory general offer) or more of the then enlarged issued share capital of the Company after such conversion; and/or (ii) the public float of the Company will be less than 25% of the issued share capital of the Company. Therefore, no Consideration Conversion Shares will be allotted and issued to the noteholders in respect of any breach of the above restrictions. The Company will closely monitor the shareholding level of the Vendor in the Company and the public float of the Company so that the Company will not issue or allot Consideration Conversion Shares if such issue or allotment will breach the above restrictions. In the S&P Agreement, the Vendor further acknowledged and agreed that he will not exercise the conversion rights under the Convertible Bonds such that his shareholding in the Company (together with the shareholding of parties acting in concert with him) will equal to or exceed 30% following such conversion. In the event that any noteholder of the Consideration CB is restricted from converting certain portion the Consideration CB from time to time, such portion of the Consideration CB will need to be held until, the latest, maturity of the Consideration CB and upon which the Company will redeem such portion at its principal amount outstanding.

Applications for Listing

No application will be made by the Company to the Listing Committee for the listing of the Consideration CB. Application will be made by the Company to the Listing Committee for the listing of, and permission to deal in, the Consideration Conversion Shares.

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Information on the Group

The Group is principally engaged in (i) electrical engineering contracting; (ii) sale of electrical goods; and (iii) securities brokerage and financing.

The Group’s securities brokerage and financing business is currently carried under a wholly owned subsidiary of the Company, namely HTH Securities, which is engaged in securities brokerage and margin financing business and is a licensed corporation under the SFO permitted to engage in type 1 regulated activity (dealing in securities). Prior to 19 September 2006, the Group’s securities brokerage and financing business also included turnover from another wholly owned subsidiary, namely HTH Capital, which was engaged in money lending business (but not in the securities brokerage and margin financing business at all). The money lender licence of HTH Capital expired on 15 June 2006 and had not been renewed. Since then, the securities brokerage and margin financing business of the Group continues to be carried under HTH Securities. Turnover from securities brokerage and financing business accounted for approximately 33.97%, approximately 32.90% and approximately 79.6% of the total turnover of the Group for the two years ended 31 March 2006 and 2007 and six months ended 30 September 2007 respectively. As reflected from the turnover from securities brokerage and financing business of the Group the year ended 31 March 2007 and the six months ended 30 September 2007, termination of the money lending business carried under HTH Capital did not have material negative impact on the securities business of the Group.

Currently, the Group does not intend to put in extra resources for its other existing principle businesses, namely electrical engineering contracting and sale of electrical goods business. The Group has no current intention to cease and/or terminate its other existing principle businesses. The Directors confirm that the existing senior management with expertise in engaging in the businesses of electrical engineering contracting and sale of electrical goods has been retained at the relevant operating subsidiaries of the Company. Turnover from electrical engineering contracting and sale of electrical goods business accounted for approximately 66.0%, approximately 67.1% and approximately 20.4% of the total turnover of the Group for the two years ended 3 March 2006 and 2007 and six months ended 30 September 2007 respectively.

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Information on Excalibur

Excalibur (formerly known as Bonche Limited) was incorporated in Hong Kong in 1992 and is principally engaged in securities brokerage and margin financing. Excalibur is an Exchange Participant and a licensed corporation under the SFO permitted to engage in type 1 regulated activity (dealing in securities) and is in line with the securities business of the Group.

As at 31 December 2007, Excalibur had an audited net assets value of approximately HK$30.05 million for year ended 31 December 2007. The following table shows certain financial information of Excalibur for the two years ended 31 December 2007:

	Year ended	Year ended
	31 December	31 December
	2006	2007
	(audited)	(audited)
	HK$’000	HK$’000
Turnover	14,674	12,798
Net profit/(loss) before taxation and extraordinary items	2,643	6,834
Net profit/(loss) after taxation and extraordinary items	2,472	5,675

Upon Completion, Excalibur will become a non-wholly owned subsidiary of the Company and its financial results will be consolidated with those of the Group.

Reasons for and benefits of the Acquisition

The Acquisition of the majority interest in Excalibur is in line with one of the existing principal businesses of the Group, i.e. securities brokerage and financing business through HTH Securities so that the Acquisition will enhance the Group’s portfolio of securities brokerage business by strengthening the income flow, enhancing the operation level and increasing the client base of the Group. The Directors are of the view that the Chinese economy will remain relatively intact and valuations of local blue chips and quality second-liners remain in demand while China stock are still attractive with a longer investment perspective given the corporate reform and the underlying economic strength and the imminent influx of capital from the PRC will be a driver for activity in the local securities market and thus is positive on the future prospects of Excalibur. By effecting the Acquisition, the Directors consider that income from securities brokerage and margin financing of Excalibur will provide an additional flow of income stream to the Group, enhance the operation level and expand the scale of business of

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the Group within a shorter period versus the organic growth of HTH Securities. Given there will be no immediate impact on the cash outflow to the Company from the Acquisition as the Consideration will be payable by way of issuance of the Consideration CB. The Group also expects to apply HK$15 million of the proceeds of the Placing CB for the expansion of margin financing business of HTH Securities (please also refer to the section headed “Use of proceeds of the Placing CB” below) The Directors consider that the Acquisition is an appropriate strategic expansion and beneficial to the Group given the current tight financial position of the Group. The Directors consider that the Acquisition was entered into under normal commercial terms which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

After the Acquisition, the Group will focus on the development of its business in securities brokerage and margin financing. The Directors will continually be actively seeking for investment opportunities of the Group. While keeping abreast with the core businesses of the Group, the Directors would look into investments in order to increase the value of the Company, which is in the interests of the Company and the Shareholders as a whole.

Listing Rules implication

The Acquisition constitutes a very substantial acquisition for the Company under the Listing Rules and is subject to the approval of Shareholders at the EGM. There is no current intention to change the composition of the Board as a result of, or related to, the Acquisition and or the Placing (as detailed in the section headed “Placing of the Placing CB” below).

The Company will seek the approval of its Shareholders at the EGM to be convened and held by the Company to approve the S&P Agreement and the transactions contemplated thereunder including the allotment and issue of the Consideration Conversion Shares upon conversion of the Consideration CB. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiry, no Shareholder have a material interest in the Acquisition other than their shareholding interests in the Shares, and accordingly no Shareholder is required to abstain from voting at the EGM.

A circular containing, among other things, (i) further details of the Acquisition and information of Excalibur; (ii) the accountants’ report of Excalibur; (iii) proforma financial information of the Enlarged Group; and (iv) a notice of the EGM for the purpose of approving the Acquisition will be sent to the Shareholders as soon as practicable and in accordance with the Listing Rules.

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PLACING OF THE PLACING CB

I. The Placing CB

On 27 February 2008, the Company entered into the Placing Agreement (as amended on 30 May 2008) with the Placing Agent in respect of the conditional placing of the Placing CB of principal amount of HK$50 million with zero coupon due in three years from the date of issue. The Placing Agreement is conditional on, among other things, the resumption of trading of the Shares on the Stock Exchange. Principal terms of the Placing Agreement, in particular the conditions to the placing of the Placing CB, are set out below.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Placing Agent is independent of the Company, the Vendor and their respective connected persons and is not a connected person (as defined under the Listing Rules) of the Company or the Vendor.

Given the fully underwritten basis of the Placing CB, the Company can be assured of the amount of the proceeds that will be available to the Company when the Placing CB are issued, and therefore can allocate with certainty its financial resources and will be able to generate HK$50 million cash, which in turn will reduce interest expenses and improve the overall financial position of the Group. In view of the above, the Board considers the terms of the Placing Agreement are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

II. Principal terms of the Placing

Issuer: the Company Placing Agent: Kingston Securities Limited Basis: Fully underwritten basis

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Placees:

Not less than six placees to be procured by the Placing Agent. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the potential placees and their respective ultimate beneficial owners are independent of the Company, the Vendor and their respective connected persons and are not connected persons (as defined under the Listing Rules) of the Company or the Vendor.

Amount:

HK$50 million

• Placing 2.5% of the principal amount of the Placing CB commission:

• Issue price: 100% of the principal amount of the Placing CB

• Interest rate: 0%

• Conversion: Noteholders have the right to convert on any Business Day from the date of issue of the Placing CB but prior to 5 Business Days prior to the maturity date, the whole or any part(s) of the principal amount of the Placing CB provided that such part of the principal amount of the Placing CB to be converted shall not be less than HK$100,000 at any one time (save that if at any time the principal outstanding amount shall be less than HK$100,000, the whole (but not part only) of the principal amount of the Placing CB may be converted)

• Redemption: Unless previously converted, the Placing CB shall be redeemed by the Company at it principal amount outstanding on the maturity date of the Placing CB

• Maturity date: The date falling on the third anniversary of the date of issue of the Placing CB

• Placing Conversion HK$0.10 per Placing Conversion Share, subject to adjustments in Price: each of the following cases (details provisions are set out in the terms and conditions of the Placing CB):

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• (a) an alteration of the nominal amount of the Shares by reason of any consolidation or subdivision;

• (b) an issue (other than in lieu of a cash dividend) by the Company of Shares credited as fully paid by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve fund);

• (c) a capital distribution being made by the Company, whether on a reduction of capital or otherwise, to the Shareholders in their capacity as such or rights being granted to Shareholders to acquire for cash assets of the Group;

• (d) an offer or grant being made by the Company to the Shareholders by way of rights or of options or warrants to subscribe for or purchase Shares at a price which is less than 90% of the market price;

• (e) an issue wholly for cash being made by the Company of securities convertible into or exchangeable for or carrying rights of subscription for new Shares, if in any case the total effective consideration per Share initially receivable for such securities is less than the greater of either 90% of the market price or the Placing Conversion Price in effect, or the terms of any such rights of conversion or exchange or subscription attached to any such securities being modified so that the said total effective consideration per Share initially receivable for such securities is less than the greater of either 90% of the market price or the Placing Conversion Price in effect;

• (f) an issue being made by the Company wholly for cash of Shares (other than Shares issued pursuant to an employee share option scheme of the Company) at a price per Share less than the greater of either 90% of the market price or the Placing Conversion Price in effect; and

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• (g) an issue being made by the Company of Shares for the acquisition of asset at a total effective consideration per Share less than the greater of either 90% of the market price or the Placing Conversion Price in effect.

The Placing Conversion Price shall not be adjusted to below the nominal value of a Share from time to time.

The Placing Conversion Price represents:

• (i) a discount of approximately 67.21% to the closing price of HK$0.305 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (ii) a discount of approximately 67.85% to the average of the closing prices of approximately HK$0.311 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the Last Trading Day;

• (iii) a premium of approximately 105.76% over the unaudited consolidated net asset value of the Company per Share of approximately HK$0.0486 as at 30 September 2007;

• (iv) the nominal price of the Share of HK$0.10 each; and

• (v) the Consideration Conversion Price.

The Board noted that the Shares had been suspended for almost 30 months since 29 September 2005 and with the tight financial position that the Company is facing, the Company has, upon arm’s length negotiation, agreed with the Placing Agent, that the Placing Conversion Price should represent a substantial discount to the closing price before suspension of the Shares so as to attract potential placees to subscribe for the Placing CB.

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Transferability:

• The Placing CB or any part(s) thereof may be assigned or transferred only with the prior written consent of the Company and subject to compliance of the conditions thereunder and further subject to the conditions, approvals, requirements and any other provisions of or under:–

• (a) the Stock Exchange (and any other stock exchange on which the Shares may be listed at the relevant time) or their rules and regulations;

• (b) the approval for listing in respect of the Placing Conversion Shares; and

• (c) all applicable laws and regulations.

If the Placing CB or any part(s) thereof shall be transferred to any company or other person which is a connected person of the Company, the Company shall promptly notify the Stock Exchange.

Voting:

Noteholders shall not be entitled to receive notices of, attend or vote at any meetings of the Company by reason only of it being the noteholders.

Ranking: The Placing CB will rank pari passu with all other present and future unsecured and un-subordinated obligations of the Company except for obligations accorded preference by mandatory provisions of applicable laws.

The Placing Conversion Shares to be issued as a result of the exercise of the conversion rights attached to the Placing CB will rank pari passu in all respects with all other Shares in issue at the date on which the conversion rights attached to the Placing CB are exercised.

Limitation Noteholders shall exercise the right of conversion to the extent on conversion: that the public float of the Company will not be less than 25% of the issued share capital of the Company immediately after such conversion

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• Events of default:

• The Placing CB contains customary events of default provisions. Upon the happening of an event of default, noteholder(s) representing not less than 75% of the principal amount of the Placing CB outstanding may give notice to the Company declaring the Placing CB to be immediately due and payable.

For illustration purpose only, the 500,000,000 Placing Conversion Shares to be issued under the Placing CB represents approximately 107.74% of the existing issued share capital of the Company, approximately 51.86% of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Conversion Shares, assuming full conversion of the Placing CB and the Placing Conversion Shares were to be issued at the Placing Conversion Price and approximately 42.95% of the issued share capital of the Company as enlarged by the allotment and issue of both the Consideration Conversion Shares and the Placing Conversion Shares, assuming full conversion of the Consideration CB and the Placing CB and the Consideration Conversion Shares were to be issued at the Consideration Conversion Price and the Placing Conversion Shares were to be issued at the Placing Conversion Price.

Notwithstanding the conversion rights attached to the Placing CB, the Placing CB provides that noteholders shall not convert the Placing CB if as a result thereof, the public float of the Company will be less than 25% of the issued share capital of the Company.

Applications for Listing

No application will be made by the Company to the Listing Committee for the listing of the Placing CB. Application will be made by the Company to the Listing Committee for the listing of, and permission to deal in, the Placing Conversion Shares.

Conditions precedent to the subscription of the Placing CB and completion

The obligations of the Placing Agent under the Placing Agreement is conditional on the following conditions being fulfilled on or before the Long Stop Date (or such later time as the Placing Agent and the Company shall agree):

• (a) the passing by the Shareholders in general meeting of the necessary resolutions approving the increase of the authorised share capital of the Company from HK$100,000,000 divided into 1,000,000,000 Shares to HK$500,000,000 divided into 5,000,000,000 Shares by creation of an additional 4,000,000,000 unissued Shares;

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• (b) the Stock Exchange having agreed in principle for the resumption of trading in the Shares on the Stock Exchange, either unconditionally or subject to conditions to which neither the Company nor the Placing Agent reasonably objects and such conditions (if any) having been satisfied;

• (c) the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in, the Placing Conversion Shares falling to be issued and allotted on the exercise of the conversion rights attached to the Placing CB either unconditionally or subject to conditions to which the Placing Agent may accept; and

• (d) the passing by the Shareholders at a general meeting of the Company of an ordinary resolution approving the Placing Agreement, the issue of the Placing CB and the allotment and issue of the Placing Conversion Shares and other transactions contemplated thereunder.

Subject to the fulfillment of the above conditions, the Placing Agent shall effect completion of the Placing within 5 Business Days after the date of fulfillment of all the above conditions. Completion of the Placing Agreement is not conditional on the completion of the S&P Agreement.

Termination of Placing Agreement

Notwithstanding anything contained in the Placing Agreement, the Placing Agent may at any time prior to completion of the Placing Agreement, terminate the Placing Agreement in, among others, any of the following circumstances:

• (a) if there has been, since the time of execution of the Placing Agreement, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Group;

• (b) if there shall have come to the notice of the Placing Agent any breach of, or any event rendering untrue, inaccurate or misleading in any respect, any of the warranties, representations or covenants contained in the Placing Agreement or any failure to perform any of the Company’s undertakings or agreements in the Placing Agreement;

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• (c) if, in the sole opinion of the Placing Agent, there has occurred any material adverse change in the financial markets in the United States, Hong Kong, the PRC or the United Kingdom or in the international financial markets, any outbreak of hostilities or epidemic or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international financial, political or economic conditions or currency exchange rates or exchange controls as would in its view be likely to prejudice materially the success of the offering and distribution of the Placing CB or dealings in the Placing CB in the secondary market or make it impractical or inadvisable to market the Placing CB or to enforce contracts for the sale of the Placing CB; or

• (d) any change, or development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company or the Group as a whole, which, in the sole opinion of the Placing Agent, is likely to prejudice materially the success of the Placing; and

• (e) if trading generally on any Hong Kong, United States, PRC or United Kingdom stock exchange or Nasdaq has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any such exchange or system or by order of the Stock Exchange, the United States Securities and Exchange Commission, the United States National Association of Securities Dealers, Inc. or any authority, or a material disruption has occurred in commercial banking or securities settlement or clearance services in Hong Kong, United Kingdom or the United States or with respect to the Clearstream or Euroclear systems in Europe, or if a banking moratorium has been declared by Hong Kong, United Kingdom or the United States Federal or New York authorities.

Use of proceeds of the Placing CB

The net proceeds of approximately HK$48 million (being gross proceeds of HK$50 million net of professional service fee of HK$2 million) from the issue of the Placing CB will be used as to approximately HK$23 million for the repayment of the outstanding indebtedness, as to approximately HK$15 million for the expansion of the margin financing business of HTH Securities and as to approximately HK$10 million for general working capital of the Group.

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Reasons and benefits for the Placing CB

The Directors, having considered that (i) the issue of the Placing CB will provide funding to the Company; (ii) the availability of funds will strengthen the financial position and working capital position of the Group; and (iii) there will be no immediate dilution effect on the shareholding of the existing Shareholders, are of the view that the issue of the Placing CB is an appropriate mean to raise additional funds for the Group. The Company has considered various financing methods, including both debt financing and equity financing. Nevertheless, in view of the lack of a sustainable profit trend, the Company has in the past experienced difficulties in obtaining sizable bank loans and thus debt financing is considered not the appropriate course to take for the Company under the present circumstances. In addition, the Company does not consider a rights issue or an open offer is a better fund raising exercise at the present development stage of the Company. Even if the Company could succeed in procuring an underwriter, the Shares to be issued in either a rights issue or an open offer would need to be at a deep discount in order to appear as attractive to such underwriter which would result in immediate and significant dilutions to Shareholders who do not participate. In contrast, the Placing CB would provide sufficient funds for the Company to carry out its business so that existing Shareholders could enjoy the possible benefits without having to suffer potential immediate dilution or alternatively being forced to pay additional money. On the other hand, given the fully underwritten basis of the Placing CB, the Company can be assured of the amounts of the proceeds that will be available to the Company when the Placing CB are issued and therefore can allocate with certainty its financial resources and will be able to generate HK$48 million cash as net proceeds in which as to approximately HK$23 million will be used to repay its outstanding indebtedness, as to approximately HK$15 million for the expansion of the margin financing business of HTH Securities and as to approximately HK$10 million as general working capital, which in turn will reduce interest expenses and improve the overall financial position of the Group. The issue of the Placing CB will allow the Company to raise additional funds at no interest cost. In addition, if the conversion rights attaching to the Placing CB are exercised, the shareholder and equity capital base of the Company will be further enlarged and strengthened. The Directors consider that the Placing Agreement was entered into under normal commercial terms which are fair and reasonable and are in the interests of the Company and its Shareholders as a whole.

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Listing Rules implication

As at the date of this announcement, as the Company did not have a general mandate to issue and allot Shares, the issue of the Placing Conversion Shares upon the conversion of the Placing CB will be made under a specific mandate. The specific mandate for the issue of the Placing Conversion Shares upon the conversion of the Placing CB will be subject to the approval of the Shareholders at the EGM.

To the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, none of the Shareholders have any material interest in the Placing Agreement. There are no arrangements or proposals (i) to issue any Placing CB to the existing Shareholders; or (ii) to use any proceeds from the issue of the Placing CB for repayment of any amounts due to the existing Shareholders (currently no creditor of the Group is a Shareholder). Accordingly, no Shareholder is required to abstain from voting at the EGM to be convened to approve the Placing Agreement and the transactions contemplated thereunder.

The Directors, including the independent non-executive Directors, believe the terms of the Placing Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

A circular containing, inter alia, further information on the Placing Agreement will be despatched to the Shareholders as soon as practicable.

In view of the extent of the dilution effect of the Consideration CB and the Placing CB, the Company will disclose by way of an announcement all relevant details of the conversion of the Consideration CB and the Placing CB in the following manner:

• (i) the Company will make a monthly announcement (the “ Monthly Announcement ”) on or before the tenth business day following the end of each calendar month and will include the following details in a table form:

• a. whether there is any conversion of the Consideration CB and/or the Placing CB during the previous calendar month. If there is a conversion, details thereof including the conversion date, number of the Consideration Conversion Shares and the Placing Conversion Shares issued and the Consideration Conversion Price and the Placing Conversion Price for each conversion. If there is no conversion during the previous calendar month, a negative statement to that effect;

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• b. the amount of outstanding Consideration CB and Placing CB after the conversion, if any;

• c. the total number of new Shares issued pursuant to other transactions during the previous calendar month, including the new Shares issued pursuant to exercise of options under any share option scheme(s) of the Company; and

• d. the total issued share capital of the Company as at the commencement and the last day of the previous calendar months;

• (ii) in addition to the Monthly Announcement, if the cumulative amount of the Consideration Conversion Shares and the Placing Conversion Shares issued pursuant to the conversion of the Consideration CB and the Placing CB reaches 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Consideration CB and the Placing CB (as the case may be) (and thereafter in a multiple of such 5% threshold), the Company will make an announcement including details as stated in (i) above for the period commencing from the date of the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Consideration CB and the Placing CB (as the case may be) up to the date on which the total amount of the Consideration Placing Conversion Shares and the Placing Conversion Shares issued pursuant to the conversion amounted to 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Consideration CB and the Placing CB (as the case may be); and

• (iii) if the Company forms the view that any issue of the Consideration Conversion Shares and the Placing Conversion Shares will trigger the disclosure requirements under Listing Rule 13.09(1), then the Company will make such disclosures regardless of the issue of any announcements in relation to the Consideration CB and the Placing CB as mentioned in (i) and (ii) above.

Apart from the issue of the Consideration Conversion Shares and the Placing Conversion Shares, the Company does not have a current intention to issue new Shares.

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PROPOSED ISSUE OF REMUNERATION SHARES AND REMUNERATION WARRANTS

Veda Capital is the financial adviser to the Company regarding the Acquisition, the Placing and the transactions contemplated thereunder. Pursuant to the engagement letter dated 15 April 2008 entered into between the Company and Veda Capital and having considered the financial position of the Group, it was agreed between the Company and Veda Capital that part of the professional fees of HK$1,200,000 charged by Veda Capital may be settled by the issue of the Remuneration Shares to Veda Capital (or its nominee(s)) at an issue price of HK$0.1 per new Share subject to and upon the approval by the Stock Exchange on the resumption of trading in the Shares, which is equivalent to the Consideration Conversion Price and Placing Conversion Price.

The Company also agreed to grant the Remuneration Warrants to Veda Capital (or its nominee(s)) subject to and upon the approval by the Stock Exchange on the resumption of trading in the Shares, which entitle Veda Capital (or its nominee(s)) to subscribe for 12,000,000 new Shares at the exercise price of HK$0.10 per Share (subject to adjustments), at any time between the date of issue of the Remuneration Warrants and 36 months thereafter.

Upon full exercise of the subscription rights attaching to the Remuneration Warrants, a total of 12,000,000 Warrant Shares, representing (i) approximately 2.59% of the issued share capital of the Company as at the date of this announcement; and (ii) approximately 1% of the issued share capital of the Company as enlarged by the issue and allotment of all of Consideration Conversion Shares, the Placing Conversion Shares, the Option Shares, the Warrant Shares and the Remuneration Shares, assuming no further Shares are issued and repurchased. The Remuneration Warrants will be issued to Veda Capital (or its nominee(s)) in registered form and constituted by the instrument creating the Remuneration Warrants. The Remuneration Warrants will rank pari passu in all respects among themselves. Each Remuneration Warrant carries the right to subscribe for one Warrant Share.

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Major terms of the Remuneration Warrants are set out as follows:

Number of 12,000,000

Remuneration Warrants:

Number of 12,000,000

Warrant Shares:

Exercise price:

HK$0.10 each, subject to adjustments in each of the following cases (details provisions are set out in the terms and conditions of the instrument of the Remuneration Warrants):

• (a) an alteration of the nominal amount of the Shares by reason of any consolidation or subdivision;

• (b) an issue (other than in lieu of a cash dividend) by the Company of Shares credited as fully paid by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve fund);

• (c) a capital distribution being made by the Company, whether on a reduction of capital or otherwise, to the Shareholders in their capacity as such or rights being granted to Shareholders to acquire for cash assets of the Group;

• (d) an offer or grant being made by the Company to the Shareholders by way of rights or of options or warrants to subscribe for or purchase Shares at a price which is less than 90% of the market price;

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• (e) an issue wholly for cash being made by the Company of securities convertible into or exchangeable for or carrying rights of subscription for new Shares, if in any case the total effective consideration per Share initially receivable for such securities is less than the greater of either 90% of the market price or the exercise price of the Remuneration Warrants in effect, or the terms of any such rights of conversion or exchange or subscription attached to any such securities being modified so that the said total effective consideration per Share initially receivable for such securities is less than the greater of either 90% of the market price or the exercise price of the Remuneration Warrants in effect;

• (f) an issue being made by the Company wholly for cash of Shares (other than Shares issued pursuant to an employee share option scheme of the Company) at a price per Share less than the greater of either 90% of the market price or the exercise price of the Remuneration Warrants in effect; and

• (g) an issue being made by the Company of Shares for the acquisition of asset at a total effective consideration per Share less than the greater of either 90% of the market price or the exercise price of the Remuneration Warrants in effect.

The exercise price of the Remuneration Warrants is equivalent to the Consideration Conversion Price, Placing Conversion Price and the issue price of the Remuneration Shares

Exercise period:

Transferability:

At any time during a period of 36 months commencing from the date of issue of the Remuneration Warrants

Transferable only to Independent Third Parties

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The subscription rights attaching to the Remuneration Warrants may be exercised in integral multiples of 1,000,000 Remuneration Warrants during the exercise period unless there are less than 1,000,000 Remuneration Warrants outstanding, the whole but not in part may be exercised. The Warrant Shares, when fully paid and allotted, will rank pari passu in all respects with the then Shares in issue on the date of allotment and issue of the relevant Warrant Shares. Save for the 11,700,000 Options which were granted to employees of the Group, there is no equity securities of the Group outstanding as at the date of this announcement. The issue of the Remuneration Warrants complies with Rule 15.02 of the Listing Rules

As at the date of this announcement, Veda Capital and Mr. Wong and their respective associates do not have any interest in any securities of the Company. Upon issue of the Remuneration Shares and the Warrants Shares, Veda Capital, Mr. Wong and their respective associates may be interested in up to 24,000,000 Shares, representing approximately 2% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Conversion Shares, the Placing Conversion Shares, the Option Shares, the Warrant Shares and the Remuneration Shares.

The Remuneration Shares and the Warrant Shares will be issued and allotted under specific mandates proposed to be sought from the Shareholders at the EGM. The issue of the Remuneration Shares and Remuneration Warrants are subject to Shareholders’ approval at the EGM but not conditional upon the Acquisition and the Placing CB. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiry, no Shareholder have a material interest in the issue of the Remuneration Shares and the Remuneration Warrants, accordingly no Shareholder is required to abstain from voting on the relevant resolutions relating to the issue of the Remuneration Shares and Remuneration Warrants at the EGM. No application will be made for listing of the Remuneration Warrants. Application will be made to the Listing Committee of the Stock Exchange in respect of such listing of and permission to deal in the Remuneration Shares and the Warrant Shares.

Use of proceeds

The issue of the Remuneration Shares will be for partial settlement of the professional fees of Veda Capital, so no proceeds will be generated therefrom. Assuming the full exercise of the subscription rights attaching to the Remuneration Warrants, it is expected that HK$1.2 million will be raised. The net proceeds of approximately HK$1.2 million (with minimal administrative expenses) will be utilized by the Group for its general working capital.

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EFFECT ON SHAREHOLDING STRUCTURE

To the best knowledge of the Directors, the existing shareholding structure of the Company and the shareholding structure of the Company upon the allotment and issue of the Consideration Conversion Shares, the Placing Conversion Shares, the Remuneration Shares and Warrant Shares under different scenarios are as follows:

Shareholders Good Treasure Holdings Limited_(Note 1) The Vendor Public Shareholders – Holders of Placing CB_ – Holders of Options (Note 2) – Veda Capital (from Remuneration Shares) – Veda Capital (from full exercise of Remuneration Warrants) – Good Treasure Holdings Limited (Note 1) – Existing public Shareholders Total	As at the date of this announcement No. of Shares % 108,000,000 23.27 – – 356,070,000 76.73 – – – – – – – – N/A N/A 356,070,000 76.73 464,070,000 100	Upon issue of the Remuneration Shares No. of Shares % 108,000,000 22.69 – – 368,070,000 77.31 – – – – 12,000,000 2.52 – – N/A N/A 356,070,000 74.79 476,070,000 100	Upon full conversion of the Consideration CB and issue of the Remuneration Shares No. of Shares % 108,000,000 15.98 200,000,000 29.58 368,070,000 54.44 – – – – 12,000,000 1.77 – – N/A N/A 356,070,000 52.67 676,070,000 100	Upon full conversion of the Placing CB and the issue of the Remuneration Shares No. of Shares % 108,000,000 11.06 – – 868,070,000 88.94 500,000,000 51.23 – – 12,000,000 1.23 – – N/A N/A 356,070,000 36.48 976,070,000 100	Upon full conversion of the Consideration CB, and the Placing CB and the issue of the Remuneration Shares No. of Shares % N/A N/A 200,000,000 17.01 976,070,000 82.99 500,000,000 42.51 – – 12,000,000 1.02 – – 108,000,000 9.18 356,070,000 30.28 1,176,070,000 100	Upon full conversion of the Consideration CB and the Placing CB and issue of the Option Shares, Remuneration Shares and Warrant Shares No. of Shares % N/A N/A 200,000,000 16.67 999,770,000 83.33 500,000,000 41.67 11,700,000 0.98 12,000,000 1.00 12,000,000 1.00 108,000,000 9.00 356,070,000 29.68 1,199,770,000 100

Notes:

1. Good Treasure Holdings Limited is a company incorporated in the British Virgin Islands and whose entire equity is beneficially wholly-owned by Mr. Li Chun Sing, Andrew

2. 11,700,000 Options were granted to employees (not Directors) of the Group under the existing share option scheme of the Company approved and adopted by the Shareholders on 12 February 2003

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INCREASE IN AUTHORIZED SHARE CAPITAL

In order to ensure that sufficient number of unissued Shares are available for issuance of the Consideration Conversion Shares, the Placing Conversion Shares, the Remuneration Shares, the Warrant Shares and the Option Shares and also for future purpose, the Board also proposes the increase in authorized share capital from HK$100,000,000 divided into 1,000,000,000 ordinary Shares of HK$0.10 each to HK$500,000,000 divided into 5,000,000,000 ordinary Shares of HK$0.10 each by the creation of an additional 4,000,000,000 ordinary shares of HK$0.10 each. Such new Shares, upon issue, shall rank pari passu in all respects with the existing Shares. The increase of the authorized share capital of the Company by 4,000,000,000 Shares is determined by taking into account the Company’s need for issuance of the Consideration Conversion Shares and the Placing Conversion Shares and provide flexibility in issuing Shares for any future investments and developments. Save for the issue of the Consideration Conversion Shares, the Placing Conversion Shares, the Remuneration Shares, the Warrant Shares and the Option Shares, the Directors have no present intention to issue additional Shares out of the increased capital.

The proposed increase in authorized share capital of the Company is conditional upon the passing of an ordinary resolution by the Shareholders at the EGM. The proposed increase in authorized share capital of the Company is a condition precedent to both completion of the S&P Agreement and the Placing Agreement.

CONTINUED SUSPENSION OF TRADING IN THE SHARES

Trading in the Shares was suspended with effect from 9:30 a.m. on 29 September 2005 at the request of the Company and will continue to be suspended until further notice.

The release of this announcement is not an indication that the S&P Agreement and Placing Agreement will be successfully implemented and completed or that the resumption of trading in the Shares has been or will be approved by the Stock Exchange.

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The Company has submitted a resumption proposal to the Stock Exchange on 15 April 2008, which is being reviewed by the Stock Exchange. The Company is providing the Stock Exchange further information in respect of the resumption proposal. The resumption proposal of the Company should demonstrate the Company’s compliance with the Listing Rules and all applicable laws and regulations. In particular, the Company is required to (i) investigate and address the issues concerning the Incident and clarify and the operations and financial position of the Group; (ii) address any concerns raised by the auditors of the Company through the qualification of their audit report on the financial statements of the Group published after the suspension; and (iii) demonstrate that it has in place adequate financial reporting system and internal control procedures to enable the Company to meet its obligations under the Listing Rules. The resumption proposal should also include sufficient details to demonstrate the Company’s compliance with Rule 13.24 of the Listing Rules.

DEFINITIONS

• “Acquisition”

• the sale and purchase of the Sale Shares pursuant to the S&P Agreement

• “Board”

the board of Directors

• “Business Day”

• a day (except Saturday, Sunday or public holiday) on which banks in Hong Kong are generally open for business

• “Company”

• China Conservational Power Holdings Limited, a company incorporated in Cayman Islands with limited liability and the Shares of which are listed on the Stock Exchange

• “Completion” completion of the S&P Agreement

• “Completion Date”

• date of completion of the S&P Agreement, being the date falling within 3 Business Days after all the conditions for the Acquisition (other than conditions (g), (h) and (i) as set out in the section headed “The Acquisition – Conditions” above) have been fulfilled or waived or at such other time as the Vendor and the Purchaser may agree in writing.

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• “Consideration”

• HK$20 million, being the consideration payable by the Purchaser to the Vendor for the Sale Shares, which shall be satisfied by the issue of the Consideration CB by the Company to the Vendor on Completion

• “Consideration CB”

• the zero coupon convertible notes due three years from the date of issue for a principal amount of HK$20 million

• “Consideration Conversion Price”

• initial conversion price of HK$0.10 per Consideration Conversion Share (subject to usual anti-dilution adjustments in certain events such as, consolidations or subdivisions of shares, capitalization issue, capital distributions, rights issues and other equity or equity derivatives issue. Provided that no adjustment shall be made which would result in the conversion price being reduced so that on conversion, Shares would fall to be issued at a discount to their nominal value, and in such case an adjustment shall be made to the effect that the conversion price shall be reduced to the nominal value of the Shares).

• “Consideration new Shares falling to be allotted and issued upon exercise of the Conversion Shares” conversion rights attached to the Consideration CB

• “Directors”

• the directors of the Company

• “EGM” an extraordinary general meeting of the Company to be convened and held to approve the S&P Agreement and the transactions contemplated thereunder, the Placing Agreement and the transactions contemplated thereunder, the issue of the Remuneration Shares and Remuneration Warrants and the increase in authorized capital of the Company

• “Excalibur” Excalibur Securities Limited, a company incorporated in Hong Kong with limited liability

• “Exchange Participant” has the meaning given to it under the rules of the Stock Exchange and “Exchange Participantship” shall be construed accordingly

• “Group” the Company and its subsidiaries

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“Hong Kong”	The Hong Kong Special Administrative Region of the PRC
“HTH Capital”	Hong Tong Hai Capital Limited, a wholly-owned subsidiary of the
	Company, which was previously engaged in the business of money
	lending
“HTH Securities”	Hong Tong Hai Securities Limited, a wholly-owned subsidiary of
	the Company engaging in the business of securities brokering and
	margin financing
“Incident”	the arrest of three former Directors by the Independent Commission
	Against Corruption for the alleged misappropriation of funds from
	the Company on 29 September 2005
“Independent Third	third party(ies) independent of the Company and connected persons
Party(ies)”	(as defined under the Listing Rules) of the Company and are not
	connected persons (as defined under the Listing Rules) of the
	Company
“Last Trading Day”	28 September 2005, being the last trading day before the date of
	this announcement
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange
“Long Stop Date”	31 July 2008
“Mr. Wong”	Mr. Wong Hin Shek, the controlling shareholder and managing
	director of Veda Capital
“Options”	options granted or to be granted under the existing share option
	scheme of the Company approved and adopted by the Shareholders
	on 12 February 2003
“Option Shares”	11,700,000 Shares to be allotted and issued upon exercise in full
	of all the outstanding share options of the Company as at the date
	of this announcement

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“Placing”	Placing of the Placing CB by the Placing Agent pursuant to the
	Placing Agreement
“Placing Agent”	Kingston Securities Limited
“Placing Agreement”	the conditional placing agreement dated 27 February 2008 (as
	amended on 30 May 2008) and entered into between the Company
	and the Placing Agent in relation to the Placing CB
“Placing CB”	the zero coupon convertible notes in principal amount of HK$50
	million due in three years from the date of issue to be issued by
	the Company pursuant to the Placing Agreement
“Placing Conversion	initial conversion price of HK$0.10 per Placing Conversion Share
Price”	(subject to usual anti-dilution adjustments in certain events such
	as, consolidations or subdivisions of shares, capitalization issue,
	capital distributions, rights issues and other equity or equity
	derivatives issue. Provided that no adjustment shall be made which
	would result in the conversion price being reduced so that on
	conversion, Shares would fall to be issued at a discount to their
	nominal value, and in such case an adjustment shall be made to
	the effect that the conversion price shall be reduced to the nominal
	value of the Shares).
“Placing Conversion	new Shares falling to be allotted and issued upon exercise of the
Shares”	conversion rights attached to the Placing CB
“Purchaser”	Yew Sang Hong Investment Services Limited, a company
	incorporated in British Virgin Island and a wholly-owned subsidiary
	of the Company
“PRC”	People’s Republic of China which, for the purpose of this
	announcement, excludes Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan

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• “Remuneration Shares”

• such number of new shares of the Company equivalent to 1% of the enlarged issued share capital of the Company upon exercise/ conversion in full of all the existing convertible securities of the Company and the issue of, conversion and exercise of all securities and convertible securities of the Company pursuant to the resumption proposal (currently such number of shares is estimated to be approximately 12,000,000) at an issue price of HK$0.10 per new share to Veda Capital (or its nominee(s)) upon the approval by the Stock Exchange on the resumption of trading in the shares of the Company

• “Remuneration such number of warrants of the Company equivalent to 1% of the Warrants” enlarged issued share capital of the Company upon exercise/ conversion in full of all the existing convertible securities of the Company and the issue of, conversion and exercise of all securities and convertible securities of the Company pursuant to the resumption proposal (currently such number of warrants is estimated to be approximately 12,000,000) at an issue price of HK$0.10 per new share to Veda Capital (or its nominee(s)) upon the approval by the Stock Exchange on the resumption of trading in the shares of the Company, which entitle Veda Capital (or its nominee(s)) to subscribe for the same number (currently such number of shares is estimated to be approximately 12,000,000) of new shares of the Company at the exercise price of HK$0.10 per share (subject to adjustments), at any time between the date of issue of the Remuneration Warrants and 36 months thereafter

• “Sale Shares”

• a total of 10,200,000 shares of Excalibur, which represents 51% of the issued share capital of Excalibur

• “SFC”

• Securities and Future Commission

• “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

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“Share(s)”

share(s) of HK$0.10 each in the capital of the Company existing on the date of this announcement and all other (if any) stock or shares from time to time and for the time being ranking pari passu therewith and all other (if any) shares or stock resulting from any sub-division, consolidation or re-classification thereof

“Shareholder(s)” holder(s) of the Shares “S&P Agreement” the sale and purchase agreement dated 27 February 2008 (as amended on 30 May 2008) entered into between the Vendor and the Purchaser in relation to the Acquisition “Stock Exchange” The Stock Exchange of Hong Kong Limited “Trading Right” the exchange trading right of the Stock Exchange legally and beneficially owned by Excalibur “Veda Capital” Veda Capital Limited, a corporation licensed under the SFO (Chapter 571 of Laws of Hong Kong) to engage in type 6 (advising on corporate finance) regulated activity, being the financial adviser to the Company “Vendor” Mr. Lao Chio Kuan “Warrant Shares” 12,000,000 Shares to be allotted and issued upon exercise in full of the Remuneration Warrants “HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent. By Order of the board of directors of China Conservational Power Holdings Limited Ng Cheuk Fan, Keith Managing Director

Hong Kong, 30 May 2008

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As at the date of this announcement, the Board consists of three Executive Directors, namely Mr. Sun Tak Yan, Desmond (Chairman), Mr. Ng Cheuk Fan, Keith (Managing Director) and Mr. Yeung Kwok Leung; and three Independent Non-executive Directors, namely Mr. Tam B Ray Billy, Mr. Ng Kay Kwok and Mr. Lam Ka Wai, Graham.

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