Television Broadcasts Limited — M&A Activity 2008

Aug 18, 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)

MEMORANDUM IN RESPECT OF ACQUISITION OF 51% INTEREST IN EXCALIBUR FUTURES LIMITED AND EXTENSION OF LONG STOP DATE IN RELATION TO THE S&P AGREEMENT AND THE PLACING AGREEMENT

Financial adviser to the Company

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The Board is pleased to announce that on 31 July 2008, the Purchaser has entered into the legally binding Memorandum with Pioneer, under which, the Purchaser agrees to purchase and Pioneer agrees to sell 51% of the issued share capital of Excalibur Futures. The EFL Acquisition constitutes a very substantial acquisition for the Company under the Listing Rules and is subject to the approval of Shareholders at the EGM.

Reference is made to the Announcement and the Circular, among other things, in relation to the S&P Agreement and the Placing Agreement. On 31 July 2008, it was agreed between the Purchaser and the Vendor and between the Company and the Placing Agent respectively to extend the Long Stop Date to 31 October 2008.

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

THE MEMORANDUM

Date: 31 July 2008 Parties: (1) Pioneer (as the vendor) (2) The Purchaser (as the purchaser)

The Memorandum is legally binding on both the Purchaser and Pioneer. Pioneer is an investment holding company and is interested in the entire issued share capital of Excalibur Securities (of which the Purchaser has conditionally agreed to purchase 51% of the equity interest pursuant to the S&P Agreement, completion of which has not been effected as at the date of this announcement) and Excalibur Futures. Pioneer is owned as to approximately 50.92% by the Vendor and as to the remaining approximately 49.08% by a third party (the “ Other Pioneer Shareholder ”) independent of the Company and its connected persons. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiry, Pioneer and its ultimate beneficial owners are third parties independent of the Company and its connected persons.

• Subject matter: Pioneer agrees to sell and the Purchaser agrees to purchase 51% of the issued share capital of Excalibur Futures at HK$10,200,000.

• Consideration: The EFL Consideration shall be HK$10,200,000, which shall be satisfied solely by way of issue of the Promissory Note by the Purchaser to Pioneer on EFL Completion. The EFL Consideration was determined after arm’s length negotiation between Pioneer and the Purchaser and the basis of determining and arriving at the EFL Consideration was by making reference of the latest financial position of Excalibur Futures, i.e. the unaudited net asset value of Excalibur Futures as at 30 June 2008 and performance of Excalibur Futures for the year ended 31 December 2007. It has also been taken into account of the improved profitability of Excalibur Futures for the first six months ended 30 June 2008 when compared to the financial performance of Excalibur Futures for the same period in 2007.

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Conditions:

EFL Completion is subject to satisfaction (or where appropriate, waiver) of the conditions set out below:

• (a) the result of a legal and financial due diligence exercise to be carried out by the Purchaser on Excalibur Futures being satisfactory to the Purchaser (in its absolute discretion) and written notice to that effect having been given to Pioneer;

• (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, the Stock Exchange and Futures Exchange in connection with the transactions contemplated under the EFL Acquisition, the implementation of and all other matters incidental to the EFL Acquisition;

• (c) the resumption of trading in the Shares on the Stock Exchange having been agreed by the Stock Exchange;

• (d) the passing by the Shareholders in the EGM of the necessary resolutions approving the EFL Acquisition in accordance with the Listing Rules;

• (e) 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 SFC, the Stock Exchange and the Futures Exchange) and other applicable jurisdictions required for the EFL Acquisition and the transactions contemplated herein being obtained;

• (f) all warranties of Pioneer remaining true and accurate as at EFL Completion and Pioneer shall have performed or complied, in all material respects, with its covenants and agreements at or prior to the EFL Completion; and

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• (g) other usual and customary closing conditions for a transaction of this nature.

EFL Completion is not inter-conditional upon the completion of the S&P Agreement.

Completion: EFL Completion is to take place on or before 30 June 2009 or such later date as the parties may agree.

Formal Agreement: The Purchaser and Pioneer shall within a period of 3 months from the date of the Memorandum enter into the Formal Agreement setting out, amongst others, the terms set out in the Memorandum in respect of the EFL Acquisition. The Formal Agreement shall contain usual and customary representations and warranties for a transaction of this nature.

Promissory Note

For the purpose of settling the EFL Consideration in the amount of HK$10,200,000, the Purchaser shall upon EFL Completion issue and execute the Promissory Note in favour of Pioneer.

The following is a summary of the key terms of the Promissory Note:

• (1) Principal amount

: HK$10.2 million

• (2) Interest

• : Nil

• (3) Final payment date : the date falling 24 months from the date of EFL Completion

(4) Prepayment : the Purchaser shall be entitled to redeem the Promissory Note (in whole or in part) at any time after EFL Completion

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Reasons for and benefits of the Acquisition

The Group is principally engaged in securities brokerage and margin financing; electrical engineering contracting; and sale of electrical goods.

Excalibur Futures was incorporated in Hong Kong in 1993 and provides brokerage services for futures and options traded on the Futures Exchange, including Hang Seng Index Futures and Hang Seng Index Options. Excalibur Futures is a licensed corporation under the SFO permitted to engage in type 2 regulated activity (dealing in futures contracts).

The Directors considered that the proposed acquisition of 51% of the issued share capital of Excalibur Futures pursuant to the Memorandum could maintain the strategic partnership with Pioneer which is in turn owned by the Vendor and the Other Pioneer Shareholder which has the management experience in the futures brokerage services and thus the EFL Acquisition of 51% of Excalibur Futures is in the interests of the Shareholders and the Company as a whole. The Group may or may not further acquire the remaining 49% interest in Excalibur Futures and will comply with the relevant Listing Rules when appropriate.

Excalibur Futures had an audited net asset value of approximately HK$24.16 million as at 31 December 2007 and unaudited net asset value of approximately HK$25.52 million as at 30 June 2008. The following table shows certain financial information of Excalibur Futures for the two years ended 31 December 2007 and six months ended 30 June 2008:

	Year ended	Year ended	six months
	31 December	**31 December **	ended 30 June
	2006	2007	2008
	**approximately **	**approximately **	approximately
	(audited)	(audited)	(unaudited)
	HK$’000	HK$’000	HK$’000
Turnover	8,193	14,010	9,358
Net profit/(loss) before taxation and
extraordinary items	3,010	1,840	1,358
Net profit/(loss) after taxation and
extraordinary items	3,010	1,840	1,358

Upon EFL Completion, Excalibur Futures will become a non-wholly owned subsidiary of the Company. The financial statements of Excalibur Futures will be consolidated in the accounts of the Group after EFL Completion.

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By entering into of the Memorandum, the Company can extend the scope of its securities business to futures brokerage service to prepare itself as a full range financial services company without incurring an immediate cash outflow. The EFL Acquisition of the majority interest in Excalibur Futures is in line with one of the existing principal business of the Group, i.e. securities brokerage and margin financing business, and with an expanded scope into the business of futures brokerage so that the EFL Acquisition is expected to strengthen the income flow, enhance the operation level and increase the client base of the Group. The Directors believe that the expanded scope of business of the Group into the futures brokerage business would provide an additional service to its clients for investment and hedging purposes while on the other hand could provide an extra income source to the Group. Given there will be no immediate impact on the cash outflow to the Company from the EFL Acquisition as the EFL Consideration will be payable by way of issuance of the Promissory Note. The Directors consider that the EFL Acquisition is an appropriate strategic expansion and beneficial to the Group.

One of the responsible officers of Hong Tong Hai Securities Limited (a wholly-owned subsidiary of the Company engaging in the securities business), Mr. Chang Chih Ping, Tony, who has been under the employment of the Group since December 2006 until now and between February 2003 and March 2004 has approximately 10 years’ experience in brokerage service for futures contracts in commodities before joining the Group. Mr. Chang was registered with the SFC as a dealer under the Commodities Trading Ordinance for about 5 years. It is the intention of the Group to retain the existing management of Excalibur Futures after the EFL Completion.

The Directors consider that the EFL 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.

Listing Rules implication

The EFL 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 EFL Acquisition.

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The Company will seek the approval of its Shareholders at the EGM to be convened and held by the Company to approve the EFL Acquisition. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiry, no Shareholder have a material interest in the EFL Acquisition and accordingly no Shareholder is required to abstain from voting at the EGM.

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

EXTENSION OF LONG STOP DATE IN RELATION TO THE S&P AGREEMENT AND THE PLACING AGREEMENT

Reference is made to the Announcement and the Circular, amongst other things, in relation to the S&P Agreement and the Placing Agreement.

On 27 February 2008, the Vendor and the Purchaser entered into 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 million. 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 convertible bonds in the principal amount of HK$50 million with zero coupon due in three years from the date of issue. On 31 July 2008, as more time is needed for the fulfillment of the conditions of the S&P Agreement and the Placing Agreement respectively, (i) the parties to the S&P Agreement, being the Purchaser and the Vendor, entered into a second supplemental agreement; and (ii) the parties to the Placing Agreement, being the Company and Kingston Securities Limited, entered into a second supplemental agreement, to extend the Long Stop Date from 31 July 2008 to 31 October 2008.

Save as disclosed herein, all other terms and provision of the S&P Agreement and the Placing Agreement remain in full force and effect and binding on all contracting parties.

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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 continue to be suspended until further notice.

DEFINITIONS

• “Announcement” an announcement of the Company dated 30 May 2008 “Board” the board of Directors; “Circular” a circular of the Company dated 30 June 2008 “Company” China Conservational Power Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the Shares of which are listed on the Stock Exchange;

• “Directors” the directors of the Company; “EFL Acquisition” the proposed acquisition of 51% of the issued share capital of Excalibur Futures by the Purchaser pursuant to the Memorandum

• “EFL Completion” completion of the EFL Acquisition “EFL Consideration” HK$10,200,000, being the consideration payable by the Purchaser to Pioneer for the acquisition of 51% of the issued share capital of Excalibur Futures, which shall be satisfied by the issue of the Promissory Note by the Purchaser to Pioneer on EFL Completion

• “EGM” an extraordinary general meeting of the Company to be convened and held to approve the EFL Acquisition and the transactions contemplated thereunder

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

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

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“Futures Exchange”	Hong Kong Futures Exchange Limited
“Formal Agreement”	a formal agreement setting out, amongst others, the terms set out
	in the Memorandum in respect of the EFL Acquisition
“Group”	the Company and its subsidiaries
“Hong Kong”	The Hong Kong Special Administrative Region of the PRC;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange
“Long Stop Date”	long stop date of the S&P Agreement and the Placing Agreement
“Memorandum”	a legally binding memorandum entered into between the Purchaser
	and Pioneer on 31 July 2008
“Pioneer”	Pioneer (China) Limited, being the owner of the entire equity
	interest in Excalibur Securities and Excalibur Futures
“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
“Promissory Note”	a promissory note in the amount of HK$10.2 million to be issued
	by the Purchaser to Pioneer upon EFL Completion
“Purchaser”	Yew Sang Hong Investment Services Limited, a company
	incorporated in the British Virgin Islands 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
“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

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“Sale Shares”	a total of 10,200,000 shares of Excalibur Securities, which
	represents 51% of the issued share capital of Excalibur Securities
“SFC”	Securities and Futures Commission
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Share(s)”	share(s) of HK$0.10 each in the capital of the Company existing
	on the date of this announcement and all other (if any) stock or
	shares from time to time and for the time being ranking pari passu
	therewith and all other (if any) shares or stock resulting from any
	sub-division, consolidation or re-classification thereof;
“Shareholder(s)”	holder(s) of the Shares;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Vendor”	Mr. Lao Chio Kuan
“HK$”	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, 18 August 2008

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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