09:25 BUILD KING HOLD<00240> - Announcement (2) million) by an independent valuer in the PRC. The Directors confirmed that the terms of the JV Agreement have been arrived at after arm's length negotiations between the parties to the agreement. Board composition The board of directors of CRTE will consist of five directors. Two are to be nominated by WKC&T, and one of whom shall be the general manager of CRTE responsible for its day-to-day management. Three are to be nominated by CRTG, and one of whom shall be the chairman of CRTE. Other major terms of the JV Agreement - CRTE shall have a term of 20 years and may apply to the relevant authority for extension six months before the expiry. Every extension of the JV Agreement may not be longer than 10 years. - The respective capital contribution payable by WKC&T and CRTG mentioned above should be paid within 30 days after the signing of the JV Agreement and the obtaining of business licence from the relevant PRC authority. - WKC&T has the right to acquire part of the entity interest in CRTE held by CRTG at face value within 18 months after the establishment of CRTE subject to the condition that in any event, the equity interest of WKC&T in CRTE shall not exceed that of CRTG. - WKC&T can dispose of all its equity interest in CRTE to CRTG at face value within two years after the establishment of CRTE upon agreement by both parties. Information Of Crtg And Crte CRTE is a wholly-owned enterprise of CRTG and is contractor of civil engineering projects in the PRC. CRTG is a state-owned limited liability company. The principal business of CRTG and its subsidiaries is the undertaking of diversified construction works in the PRC. CRTE recorded an audited net profit before tax and after tax of around RMB0.6 million (equivalent to around HK$0.6 million) and RMB0.4 million (equivalent to around HK$0.4 million) respectively for the year ended 31 December 2002. The audited net loss before tax and after tax was around RMB15.5 million (equivalent to around HK$14.6 million) and RMB15.6 million (equivalent to around HK$14.7 million) respectively for the year ended 31 December 2003. For the year ended 31 December 2003, CRTE recorded an audited total turnover of around RMB769.9 million (equivalent to around HK$726.3 million) and the segment turnover of public construction works was around RMB331.6 million (equivalent to around HK$312.8 million). As at 31 December 2003, the audited net assets of CRTE were around RMB34.8 million (equivalent to around HK$32.8 million). As disclosed above, pursuant to the JV Agreement, save for the company's name, business goodwill and the "First Class Main Contractor Licence of Municipal Public Works" held by it, all the existing assets and liabilities of CRTE will be transferred to a new entity to be established by CRTG after CRTE has obtained the relevant approval in relation to the Co-Investments. Reasons For The Investment The Group is principally engaged in the undertaking of civil engineering projects in Hong Kong, the PRC and Taiwan. As stated in the interim report of the Company for the six months ended 30 June 2004, the Group intends to continue to explore new business opportunities in the PRC, the Middle East and Taiwan on both construction work and environment infrastructure projects as the prospects in Hong Kong is limited for the remainder for this year. The Directors believe that with the good reputation and strong management of the Group, these markets will provide opportunities for future growth thereby moving towards its long term objective of profitable growth. As the Investment allows the Group to invest in a company which holds the appropriate licence for municipal public works, this provides the Group an opportunity to enter the PRC civil construction engineering industry. Accordingly, the Directors consider that the Investment is fair and reasonable and in the interests of the Company and the Shareholders as a whole. General The Investment constitutes a discloseable transaction for the Company under the Listing Rules. A circular containing details of the JV Agreement in accordance with Chapter 14 of the Listing Rules will be despatched to the Shareholders as soon as practicable.