09:30     CHINA RES CMENT<00712> - Announcement (2)                           

    which was being leased to Zhanjiang CR Cement together with, among other  
     things, the production facilities. The landlord is under liquidation     
    and its assets were recently on tender. The operations of Zhanjiang CR    
    Cement may be disrupted if the leased production plant and land were      
    acquired by competitors. Zhanjiang is located in the South-western part   
    of the Guangdong Province. Zhanjiang CR Cement is the only cement plant   
    of the Group that can economically serve that region. Accordingly, it is  
     in the interest of the Company to tender such assets in order to         
    continue production. Zhanjiang CR Cement has successfully tendered for    
    the Acquisition.                                                          
                                                                              
    DEEMED ACQUISITION                                                        
                                                                              
    In order to obtain financial resources for the purpose of the             
    Acquisition, upon negotiation, it was agreed that Zhanjiang CR Cement     
    will distribute all its accumulated profit immediately before the         
    injection of capital to its shareholders in the form of dividends in      
    proportion to the shareholding interests. After the distribution,         
    Guangxi CR Cement and Profit Pool would inject additional funds to the    
    extent of approximately HK$12.5 million and HK$3.8 million respectively   
    as capital injection in cash. Accordingly, the consideration of the       
    Deemed Acquisition represented the corresponding equity interest of       
    shareholders equity of Zhanjiang CR Cement and represented neither        
    premium nor discount to the net asset value at the time of capital        
    injection.                                                                
                                                                              
    As the capital injection is not in proportion to the respective           
    shareholdings, the indirect shareholding interest of the Company in       
    Zhanjiang CR Cement will be increased from 51% to 70% upon the            
    completion of the capital injection. There is a deemed acquisition of     
    19% equity interest in Zhanjiang CR Cement.                               
                                                                              
    The directors of the Company, including the independent non-executive     
    directors of the Company, consider that the Supplemental JV Agreement     
    was entered into on normal commercial terms which are fair and            
    reasonable as far as shareholders of the Company are concerned.           
                                                                              
    INFORMATION ABOUT ZHANJIANG CR CEMENT                                     
                                                                              
    Zhanjiang CR Cement was established as a sino foreign joint venture       
    company in PRC on 3 March 2003 pursuant to the joint venture agreement    
    dated 12 February 2003 entered into between Guangxi CR Cement and Profit  
     Pool with a registered capital of HK$5,680,000, of which 49% and 51%     
    are beneficially held by Profit Pool and Guangxi CR Cement respectively.  
     It is principally engaged in the manufacture and sale of cement          
    products in Zhanjiang, PRC.                                               
                                                                              
    The net asset value of Zhanjiang CR Cement as at 31 December 2003 is      
    approximately RMB6.3 million (equivalent to approximately HK$5.9          
    million). As stated above, all the accumulated profit of Zhanjiang CR     
    Cement will be distributed to its shareholders. Therefore, the net asset  
     value of Zhanjiang CR Cement immediately before the capital injection    
    will be approximately RMB6.0 million (equivalent to approximately HK$5.7  
     million).                                                                
                                                                              
    The audited profit before taxation and minority interests and net profit  
     after taxation and minority interests of Zhanjiang CR Cement for the     
    period from 3 March 2003 (date of establishment) to 31 December 2003      
    were approximately RMB0.27 million (equivalent to approximately HK$0.25   
    million) and approximately RMB0.27 million (equivalent to approximately   
    HK$0.25 million), respectively.                                           
                                                                              
    INFORMATION ABOUT THE COMPANY                                             
                                                                              
    The Company is a listed company on the Stock Exchange and the business    
    of the Group includes production, distribution and sale of cement,        
    concrete, mortars and shotcrete in Hong Kong and PRC.                     
                                                                              
    GENERAL                                                                   
                                                                              
    As Profit Pool is a substantial shareholder of Zhanjiang CR Cement, the   
    entering into the Supplemental JV Agreement and the Deemed Acquisition    
    constitutes a connected transaction of the Company under the Listing      
    Rules. As each of the relevant percentage ratios is less than 2.5%, the   
    connected transaction is only subject to the reporting and announcement   
    requirement in accordance with rules 14A.45 and 14A.47 of the Listing     
    Rules and is exempt from the independent shareholders' approval           
    requirement.                                                              
                                                                              
    DEFINITIONS                                                               
                                                                              
    "Acquisition"   the tender for such assets of the landlord by Zhanjiang   
    CR Cement at the total consideration of RMB16.8 million (equivalent to    
    approximately HK$15.8 million)