XIAMEN YAN PALACE BIOENGINEERING CO., LTD. — M&A Activity 2000

Nov 30, 2000

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.

	CARRY WEALTH HOLDINGS LIMITED （恒富控股有限公司）* (Incorporated in Bermuda with limited liability)

Proposed Acquisition of Charter, S.A. de C.V.

Connected Transaction

On 29th November, 2000, the Purchaser, a wholly-owned subsidiary of the Company, entered into the Agreement for the acquisition of the entire issued share capital of Charter for US$2 million from Wang and Tao. Wang and Tao are connected persons (as defined under the Listing Rules) of the Company.

The terms of the Agreement have been negotiated on an arm's length basis. The directors of the Company, including independent non-executive directors, consider that the terms of the Agreement are on normal commercial terms and are fair and reasonable so far as the shareholders of the Company as a whole are concerned.

The Acquisition constitutes a connected transaction for the Company under Rule 14.26 of the Listing Rules and will be subject to the approval by the Independent Shareholders at a special general meeting to be convened. Details of the Agreement together with notice of the special general meeting will be contained in a circular to be despatched to the shareholders of the Company within 21 days of publication of this announcement. Wang, Tao, Respected International Limited, Mr. Lee Sheng Kuang, James and their associates, as defined in the Listing Rules, will abstain from voting at the special general meeting.

Agreement dated 29th November, 2000

Purchaser: Times King Limited, a wholly-owned subsidiary of the Company.

Vendors: Wang and Tao, who are a sister and brother-in-law of Mr. Lee Sheng Kuang, James, the managing director of the Company. Respected International Limited, a substantial shareholder of the Company, is ultimately owned as to 45.83% by Mr. Lee Sheng Kuang, James.

Charter is owned as to 5% by Wang and 95% by Tao.

Interests to be Acquired by the Purchaser under the Agreement

The Purchaser will acquire 200 shares of C$1,000 each in Charter, being 100% of its issued shares. Charter is a company established in El Salvador. Charter is engaged in the manufacture of knit tops apparel products in El Salvador. According to Charter's management accounts, (i) the net asset value of Charter as at 31st August, 2000 is C$6,246,000 (about HK$5,568,000); and (ii) the net profit of Charter for the eight months ended 31st August, 2000 and the two years ended 31st December, 1999 and 31st December, 1998 are C$2,161,000 (about HK$1,926,000), C$6,190,000 (about HK$5,518,000) and C$5,406,000 (about HK$4,819,000) respectively.

Consideration and Profit Guarantee

The Consideration shall be US$2 million (about HK$15.6 million), US$1.9 million (about HK$14.82 million) of which will be paid in cash on Completion and US$100,000 (about HK$780,000) of which will be deposited with the Purchaser's solicitors and payable to the Vendors subject to adjustment as follows:

(a) if the net profit of Charter for the period from 1st January, 2000 to the Completion Date as indicated by the Completion Accounts shall be less than US$800,000 (about HK$6.24 million), then the Consideration shall be reduced by a sum equal to such deficiency multiplied by 2.5 and deducted from the sum of US$100,000 (about HK$780,000) deposited with the Purchaser's solicitors provided that if such sum is larger than US$100,000 (about HK$780,000), then the Vendors shall be jointly and severally liable to pay the shortfall to the Purchaser within 15 business days upon demand by the Purchaser (a further announcement will be made if such shortfall arises); and

(b) if there is no such deficiency or if the sum equal to such deficiency multiplied by 2.5 is less than US$100,000 (about HK$780,000), such sum of US$100,000 (about HK$780,000) or the balance thereof will be released to the Vendors within 15 business days after the Completion Accounts have been issued to the Purchaser.

The Consideration was determined on an arm's length basis having regard to the above mentioned trading results of Charter and the above profit guarantee by the Vendors. The said multiplier of 2.5 was determined based on the expected profit-earning ratio of Charter.

Conditions

The Agreement is conditional upon, among other things:

(a) the completion of due diligence on Charter by the Purchaser or its advisers (including, without limitation, an El Salvador legal opinion on Charter) the results of which are reasonably satisfactory to the Purchaser;

(b) the passing by Independent Shareholders of the Company in a general meeting of an ordinary resolution approving the Agreement and its implementation in accordance with the requirements of the Listing Rules; and

(c) other necessary consents and governmental approvals, if any, having been obtained.

If the conditions are not satisfied (or waived by the Purchaser) on or before 31st January, 2001, the Agreement will lapse.

Source of Funding

The Acquisition will be funded by internal resources of the Group. There will be no material effect on the Group's working capital.

Completion Date

Completion shall take place no later than the seventh business day of the Agreement becoming unconditional.

Further Information about the Group

The Group is engaged in the manufacture of knit tops, woven bottoms and sweater tops apparel products for various overseas popular brand names, mainly in the United States. The Group's own production base is in Indonesia.

Reasons for the Acquisition

The Group's principal strength is the expertise in quality control and management knowledge of the garment manufacturing industry. The Group believes a combined control over the production and marketing functions has a synergy effect in increasing its overall efficiency and productivity.

Charter has been a sub-contractor of the Group for several years, and both parties have since established good business relationship. With the Group's management expertise in production and quality control as aforesaid, the Acquisition will lead to an enhancement in the productivity of Charter. Apart from an expected increase in the Group's sales and profit, Charter shall also provide a potential backup for the production facilities in Indonesia, where the Group's production base is situated.

The Acquisition also takes advantage of the recent change in the legislation in the United States. The Trade and Development Act of 2000 in the United States, which took effect from October 2000, endorsed additional trade benefits to designated countries including El Salvador. This trade program provides for the entry of specific apparel articles free of duty and free of any quantitative restrictions and limitations. This couples with the geographical advantage of El Salvador being close to the United States market makes Charter strategically an attractive production arm with potential productivity growth.

Accordingly, the Group trusts that the acquisition of Charter is beneficial to the shareholders of the Company. The terms of the Agreement have been negotiated on an arm's length basis. The directors of the Company, including the independent non-executive directors, consider that the terms of the Agreement are on normal commercial terms and are fair and reasonable so far as the shareholders of the Company as a whole are concerned.

General

As Wang and Tao are a sister and brother-in-law of Mr. Lee Sheng Kuang, James, the managing director of the Company, the Agreement constitutes a connected transaction for the Company under Rule 14.26 of the Listing Rules.

The Agreement will require approval by the Independent Shareholders at a special general meeting to be convened. Details of the Agreement, a letter of recommendation from the independent board committee of the Company, and a letter of advice by an independent financial adviser to the independent board committee will be contained in a circular to be despatched to the shareholders of the Company within 21 days of publication of this announcement pursuant to the Listing Rules. Notice of the special general meeting will be despatched to the shareholders of the Company with the circular. Wang, Tao, Respected International Limited, Mr. Lee Sheng Kuang, James and their associates, as defined in the Listing Rules, will abstain from voting at the special general meeting.

Definitions

The following terms are used in this announcement:

Acquisition the acquisition of the entire issued share capital of Charter by the Purchaser

Agreement the agreement for sale and purchase dated 29th November, 2000 in respect of 100% of issued shares of Charter

Charter Charter, S.A. de C.V., a company established in El Salvador

Company Carry Wealth Holdings Limited

Completion completion of the Agreement

Completion Accounts management accounts of Charter from 1st January, 2000 to the Completion Date to be prepared and issued by a firm of accountants as approved by the Purchaser

Completion Date the date of Completion

Consideration consideration for the sale of the shares in Charter under the Agreement

C$ Colones, the lawful currency of El Salvador

Group the Company and its subsidiaries

HK$ Hong Kong dollars, the lawful currency of Hong Kong Special Administrative Region of the People's Republic of China

Independent Shareholders shareholders of the Company other than Wang, Tao, Mr. Lee Sheng Kuang, James and their associates, as defined in the Listing Rules

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

Purchaser Times King Limited, a company incorporated in the British Virgin Islands

Stock Exchange The Stock Exchange of Hong Kong Limited

Tao Mr. Tao Tieh-Lian

US$ United States dollars, the lawful currency of the United States of America

Vendors Tao and Wang

Wang Mrs. Wang Lee Ching-Hsien, alias Queenie Wang

For reference purposes only, the exchange rates of (i) C$1.00 equals HK$0.8914 and (ii) US$1.00 equals HK$7.8 are used in this announcement.

By order of the board

Carry Wealth Holdings Limited

Tang Chak Lam

Executive Director

Hong Kong, 29th November, 2000

* For identification purposes only

Please also refer to the published version of this announcement in the Hong Kong iMail.