11:20 ZHEJIANG GLASS<00739> - Announcement & Resumption (5) Group has completed the construction of its first Low-E coated glass production line with an annual production capacity of 2 million sq.m. in 2004. The first Low-E coated glass production line of the Group only commenced commercial production in December 2004. Therefore, its utilisation rate is currently minimal. However, as the Directors expect that there will be an increasing demand for Low-E coated glass, it is considered necessary and beneficial to make further investment in the construction of a new production line. The Group intends to further set up a new production line for the production of Low-E coated glass with an annual production capacity of 2.6 million sq.m. together with the ancillary production lines of tempered glass, laminated glass and insulating glass, which upon completion will be carried on by Zhejiang Engineering Glass Company Limited, 90% interest of which is owned by the Company with the remaining 10% interest being owned by an independent third party. The Company was interested in 90% of the registered capital of Zhejiang Engineering Glass Company Limited as at the date of this announcement. Investment amount The Company estimates that the total investment in the Low-E Glass Production Line will be approximately RMB270 million, among which approximately RMB180 million will be funded from the net proceeds received by the Company from the A Share Issue. Benefits of the Low-E Glass Production Line Low-E coated glass is characterised by its ability to insulate heat and to reduce noise penetration and thus is widely used as glass panels on the outer wall of buildings. Certain cities like Beijing and Shanghai have already seen the increasing use of Low-E coated glass for new buildings. Given the growth in demand for energy and rising power tariff in the PRC, the Directors believe that the local government will strive to encourage or urge the construction sector to adopt energy-saving Low-E coated glass for new commercial and residential buildings in the future. Therefore, it is expected that the demand for Low-E coated glass and other processed glass such as laminated glass and insulating glass will further increase and the manufacturing of such processed glass will generate substantial revenue for the Group. The current plan of the Company is to appoint contractors to carry out construction work and to purchase equipment and machineries to build a brand new production line for each of the Proposed Projects. There is no plan to acquire businesses or equity interests in companies carrying on soda ash production, ultra-thin glass production, ultra-thick glass or Low-E coated glass production. 4. Shareholders' approval and other approvals The Class Meetings and the EGM will be held on or around 28 February 2005 to consider and, if thought fit, approve, among other things, the A Share Issue. It should be noted that the A Share Issue, upon the approval of the Shareholders at the Class Meetings and the EGM, is still subject to the approval of the CSRC and other government authorities, if necessary. In addition, the approval of the Shanghai Stock Exchange as to the listing and dealings in the A Shares on the Shanghai Stock Exchange is also required. Upon obtaining the requisite Shareholders' approval at the Class Meetings and the EGM, it is expected that the listing application will be made in or around the mid of March 2005. 5. Reasons for and benefits of the A Share Issue The Directors believes that the A Share Issue will provide financial resources required for the development of the Proposed Projects. It is expected that after completion of the Proposed Projects, the scale of production and market share of the Group will be further enhanced. The Directors believe that the A Share Issue will benefit the Company and the Shareholders as a whole. 6. Effect of the A Share Issue on the Company's shareholding structure Set out below is the shareholding structure of the Company as at the date of this announcement and immediately upon completion of the A Share Issue based on the assumption that an aggregate of 280 million new A Shares will be issued under the A Share Issue: Immediately after As at the date of completion of the this announcement A Share Issue Number of Number of