09:30 NORSTAR<02339> - Announcement & Resumption of Trading (4) States, Canada and Europe. As at the date of this announcement, Mr. Liu is interested in 100% equity interest in the Profound Global Group and the cost of investment of Mr. Liu in the Profound Global Group is USD59,899,900 (equivalent to approximately HK$467,219,220). Profound Global is an investment holding company and the sole asset of which is its 100% equity interest in Profound Automotive. Profound Automotive is an investment holding company holding 100% equity interest in each of Grandwell and Profound Automobile. The Profound Global Group, through Grandwell and Profound Automobile is principally engaged in the trading and distribution of auto parts and the manufacture and distribution of metal hardware products. The Profound Global Group's operating bases are located in Anhui and Shenyang, the PRC, with production facility capable of producing over 30 million units of metal hardware products or auto parts per annum. The Profound Global Group has an extensive sales and distribution network for auto parts covering Northeastern China, Eastern China, Southern China and Southwestern China, and has close business relations with major auto parts system integrators and distributors in the PRC. As at the date of this announcement, though the WFOEs are required to prepare annual audited accounts based on the generally accepted accounting standards in the PRC, none of Profound Global (being a company incorporated in the British Virgin Islands) nor Profound Automotive (being a company incorporated for a period less than 15 months in Hong Kong) is required to prepare any HKGAAP audited accounts, and therefore no HKGAAP audited financial information of the Profound Global Group is available to the Company. The table below sets forth the unaudited financial information of the Profound Global Group (prepared in accordance with HKGAAP) based on the management account of the Profound Global Group for each of the two financial years ended 31 December, 2003: For the year ended For the year ended 31 December, 2002 31 December, 2003 (RMB) (RMB) Turnover 263,769,907 922,224,410 Profit before 24,014,658 73,147,776 taxation Profit after 24,014,658 68,534,200 taxation As at 31 December, 2003, the unaudited net asset value and the unaudited total assets of the Profound Global Group was RMB588,014,847 and RMB636,458,843, respectively. The audited financial information of the Profound Global Group for the year ended 31 December, 2003 and for the six month period ended 30 June, 2004 are expected to be included in the circular to be despatched by the Company to Shareholders in relation to the Subscription Agreement. The Directors believe that such audited financial information to be included in the circular would not be materially different from the above unaudited information, and in the event that there will be any such material difference, an explanation will be made in the circular, and appropriate announcement will also be made. Upon Completion, Profound Global will become an associated company of the Company. In accordance with HKGAAP, the assets and liabilities and the results of the Profound Global Group will be included by way of equity accounting in the Group's financial statements. Reasons for the Subscription As stated in the prospectus issued by the Company on 29 September, 2003, it has been the Group's intention to further develop the domestic sales of its auto parts. The Directors note the increasing demand in the PRC domestic automotive market, and expect that the Subscription will provide a strategic opportunity for the Group to penetrate into the auto parts market in the PRC. Through the strategic relationship with the Profound Global Group, the Directors believe that the Subscription could bring synergy effect to both the Group and the Profound Global Group in terms of sharing of resources such as technology know-how, and machinery and consolidation of the marketing, sales force and distribution network, as well as benefiting from the economies of scale. Both the Group and the Profound Global Group are engaged in the production and distribution of auto parts and metal hardware productions. While the Group's auto parts are mainly exported to overseas market such as the United States, Canada and Europe, the auto parts of the Profound Global Group are mainly distributed in the PRC domestic market. The Directors consider the PRC domestic sales and distribution network possessed by the Profound Global Group is an excellent complement to the Group's existing overseas sales and distribution network.