09:52     ZHEJIANG GLASS<00739> - Announcement (3)                            

    (d)  the Company has already obtained an approval-in-principle from the   
    Land Resources Bureau of Shaoxing County in December 2004 in respect of   
    the Acquisition.                                                          
                                                                              
    Warranties                                                                
                                                                              
    Hua Hong has warranted to the Company under the Agreement, among          
    others, that:                                                             
                                                                              
    (a)  the land premium of the Land Use Rights for the grant of the         
    Relevant Land has been paid to the relevant PRC land authority and the    
    land use right certificates for the Relevant Land have been properly      
    issued to Hua Hong;                                                       
                                                                              
    (b)  the Land Use Rights are valid and subsisting until 18 April 2054;    
                                                                              
    (c)  the Land Use Rights are free from encumbrances;                      
                                                                              
    (d)  Hua Hong is the sole beneficial owner of the Land Use Rights and     
    enjoys exclusive rights over the Relevant Land; and                       
                                                                              
    (e)  (i) no actual or potential disputes in respect of any matters in     
    connection with the Relevant Land have arisen between Hua Hong and any    
    third parties (including the government, the owner of the land use        
    right or other users of the adjoining land or any other parties); and     
    (ii) Hua Hong has obtained all approvals and permits from the relevant    
    government authorities in respect of all matters in connection with the   
    Relevant Land and has not violated any applicable laws and regulations    
    of the PRC.                                                               
                                                                              
    Termination                                                               
                                                                              
    In the event that the Company shall fail to obtain the land use right     
    certificate of the Relevant Land within 120 days (or such longer period   
    as the parties may agree) after the date on which the Agreement was       
    signed by both parties, then unless otherwise agreed by Hua Hong and      
    the Company in writing, the Agreement shall, upon the Consideration       
    paid by the Company to Hua Hong be refunded in full to the Company,       
    forthwith lapse and no party thereto shall have any claim against or      
    liability to the other, save in respect of any antecedent breaches of     
    the Agreement such as a breach of warranty by Hua Hong. Further           
    announcement will be made by the Company in the event that the            
    Agreement is terminated in the above circumstances.                       
                                                                              
    REASONS FOR THE ACQUISITION                                               
                                                                              
    The Company is principally engaged in the business of manufacturing,      
    processing and sale of glass products in the PRC.                         
                                                                              
    With a view to increasing its production capacity and further expand      
    its market share in the glass industry of the PRC, the Company intends    
    to set up new float flat glass production lines for the production of     
    automotive-grade flat glass which is a kind of high quality float flat    
    glass. The sales of automotive-grade flat glass manufactured by the       
    Group accounted for more than 80% of the Group's flat glass sales for     
    the first six months in 2004, with the remaining 20% sales being          
    attributable to construction-grade glass. In view of the higher quality   
    and higher average selling price of automotive-grade flat glass as        
    compared with those of construction-grade glass, the Company intends to   
    increase the production capacity for automotive-grade flat glass by the   
    construction of two new production lines, the operations of which are     
    expected to commence by or around the end of 2005. It is expected that    
    the demand for automotive-grade flat glass will continue to grow due to   
    the continuing improvement in the overall living standard in the PRC.     
                                                                              
    Given the fact that the capacity of the Group's existing five             
    production lines (with an aggregate daily melting capacity of 2,350       
    tonnes) is almost fully utilised and that the Group has consistently      
    achieved sales to production ratio of over 95% over the past few years,   
    the Directors consider that the construction of new production lines is   
    necessary and will enhance the profitability of the Group. In line with   
    the government policy which encourages utilisation of unused land, the    
    Directors believe that the Acquisition of the Relevant Land which is      
    owned by Hua Hong, but is idle, can suitably serve the purpose of the     
    Group.                                                                    
                                                                              
    The Directors consider that the terms offered by Hua Hong under the       
    Agreement were no less favourable than those offered by independent       
    third parties. So far as the Directors are aware, there is no suitable    
    vacant land in the vicinity of the Relevant Land and of the operating     
    area of the Company, which may be offered to the Company from             
    independent third parties. Given that the Relevant Land has been          
    acquired by Hua Hong and has remained vacant and unused, the Directors    
    believe that, provided that the terms of the Agreement were negotiated