09:26 CHINA RES CMENT<00712>-Announcement&Resumption of Trading(4) Cement Finance Limited to Firstsuccess Investments Limited, a wholly owned subsidiary of China Resources Holdings. The prospectus of the Clawback Offer is expected to be despatched to the Shareholders on or before 24 January 2005. Under the terms of the instrument constituting the Bonds, the allotment and issue of the Consideration Shares on completion of the Acquisition will not trigger an adjustment to the initial conversion price of the Bonds of HK$2.00 per Share. China Resources Holdings has undertaken to the Company and the Stock Exchange that it will not exercise its rights to convert the Bonds if such conversion would result in Shares of less than the specified percentage required by the then prevailing Listing Rules being held by the public. As at the date of this announcement, this percentage is at 25% for the Company. Accordingly, the last two columns of the above table is just for illustrative purpose only. The Consideration Shares and the Conversion Shares when fully paid and issued will rank pari passu in all respects with the existing Shares then in issue. An application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares and an approval has been received from the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares. REASONS FOR THE ACQUISITION The Company will acquire an additional interest of 25% equity interest of China Resources Dongguan Cement through the Acquisition. Upon the completion of the Acquisition, China Resources Dongguan Cement will become a wholly owned subsidiary of the Company. The Acquisition will enable the Company to centralise the management and operation of China Resources Dongguan Cement and effectively integrate the operation of China Resources Dongguan Cement with other cement plants of the Group. The Acquisition will not only enable the Company to implement its development strategy through China Resources Dongguan Cement but also lead the restructuring of the cement industry in the Guangdong Province. The executive Directors consider that the Share Swap Agreement was entered into on normal commercial terms and the Consideration for the Acquisition is fair and reasonable as far as the Shareholders are concerned and the Share Swap Agreement is in the interest of the Company and its Shareholders as a whole. The independent non-executive Directors will provide their views on the Share Swap Agreement in the circular to be despatched to the Shareholders upon reviewing the letter of recommendation to be provided by the independent financial adviser. INFORMATION ABOUT CHINA RESOURCES DONGGUAN CEMENT China Resources Dongguan Cement is a company incorporated in Hong Kong with limited liability. It is beneficially held as to 25% by the Vendors and 75% by the Company. It is principally engaged in investment holding of Dongguan Cement and trading of cement products. Dongguan Cement is engaged in the manufacture and trading of cement products in the PRC. Dongguan Cement's cement plant is located at the Dongguan city, Guangdong Province, the PRC. The cement plant currently consists of one grinding mill to process clinker into cement. It has an annual production capacity of approximately 1,000,000 tonnes of cement. A slag vertical mill with annual production capacity of about 500,000 tonnes of slag powder or cement is under construction and is expected to put into commercial operations in May 2005. China Resources Dongguan Cement acquired Dongguan Cement on 10 September 2003. According to the audited consolidated financial statements for the year ended 31 December 2003 of China Resources Dongguan Cement which accounted for the full year result of China Resources Dongguan Cement and about three and a half months result of Dongguan Cement, the audited consolidated profit before taxation and minority interests and consolidated net profit after taxation and minority interests of China Resources Dongguan Cement for the year ended 31 December 2003 were approximately HK$0.8 million and approximately HK$0.2 million respectively and the audited loss before taxation and minority interests and net loss after taxation and minority interests for the year ended 31 December 2002, which represented the result of China Resources Dongguan Cement only, were approximately HK$7.1 million and approximately HK$6.0 million respectively. INFORMATION ABOUT THE COMPANY