10:05     SINOCHEM HK<00297> - Announcement & Resumption of Trading(3)        

    Capital Reorganisation                                                    
                                                                              
    The Board also proposes the Capital Reorganisation for approval           
    by the Shareholders at the SGM. The Capital Reorganisation will           
    comprise:                                                                 
                                                                              
    (i)   the Capital Reduction  the nominal value of each of the             
    issued Ordinary Shares will be reduced by HK$0.09 by cancelling           
    an equivalent amount of paid-up capital per Ordinary Share so that        
    the nominal value of each Ordinary Share will be reduced from             
    HK$0.10 to HK$0.01 and the entire credit arising from the Capital         
    Reduction will be transferred to the contributed surplus account          
    of the Company;                                                           
                                                                              
    (ii)   the Share Consolidation  subject to and immediately                
    following the Capital Reduction, every 10 Reduced Shares of               
    HK$0.01 each then in issue will be consolidated into one New Share        
    of HK$0.10;                                                               
                                                                              
    (iii)   an increase in authorised share capital  the authorised           
    share capital of the Company will be increased to                         
    HK$1,316,000,000, comprising 10,000,000,000 ordinary shares of            
    HK$0.10 each and 316 Preference Shares of HK$1,000,000 each;              
                                                                              
    (iv)   the Existing Share Premium Cancellation  the entire                
    balance standing to the credit of the share premium account of            
    the Company as at 31 March 2004 will be cancelled, and the credit         
    arising from the Existing Share Premium Cancellation will be              
    transferred to the contributed surplus account of the Company;            
    and                                                                       
                                                                              
    (v)   the Further Share Premium Cancellation  if Completion               
    occurs following the implementation of the matters referred to            
    in (i) to (iv) above, a further amount of HK$131,625,200                  
    representing part of the share premium arising from the issue of          
    the Consideration Shares will be cancelled, and the credit                
    arising from the Further Share Premium Cancellation will be               
    transferred to the contributed surplus account of the Company.            
                                                                              
    The Directors intend to utilise the entire balance standing to            
    the credit of the Company's contributed surplus account as at 31          
    March 2004, as well as all sums credited to that account as               
    described above, to set off against an equivalent amount of the           
    accumulated losses of the Company as at 31 March 2004. Further            
    details in this regard are set out in the section headed Capital          
    Reorganisation below.                                                     
                                                                              
    Other matters                                                             
                                                                              
    .   General mandates to issue and repurchase shares  It is                
    proposed that general mandates be granted to the Directors to (a)         
    repurchase ordinary shares representing up to 10% of the issued           
    ordinary share capital of the Company as enlarged by the issue            
    of the Consideration Shares and (b) allot, issue and deal with            
    additional ordinary shares with an aggregate nominal value not            
    exceeding 20% of the aggregate nominal amount of the issued               
    ordinary share capital of the Company, as enlarged by the issue           
    of the Consideration Shares upon Completion. Ordinary                     
    resolutions will be proposed at the SGM for the Shareholders to           
    approve the General Mandates.                                             
                                                                              
    .   Change of financial year end  Upon Completion, it is the              
    Company's intention to change the financial year end of the               
    Enlarged Group to 31 December going forward to conform with the           
    financial year end of the Fertiliser Group, to provide a                  
    consistent accounting period for the Enlarged Group in order to           
    consolidate the results of the Fertiliser Group with those of the         
    Group. A resolution will be proposed at the SGM for approval of           
    this change by the Shareholders. Where necessary, a waiver                
    application to the Stock Exchange in respect of Rule 8.21 of the          
    Listing Rules, which prohibits a change of financial year end for         
    a new listing applicant, will be made.                                    
                                                                              
    General                                                                   
                                                                              
    Cazenove is the financial adviser to Sinochem Corporation in relation     
    to the Acquisition and will also act as the sponsor to the Company's      
    new listing application as a result of the Acquisition.                   
                                                                              
    An independent board committee will be formed to advise the               
    Independent Shareholders on, among others, the Acquisition, the           
    Whitewash Waiver and the Non-exempt Continuing Connected                  
    Transactions. An independent financial adviser will be appointed          
    to advise the independent board committee and the Independent             
    Shareholders in this connection. The Company will make a further          
    announcement on the appointment of such independent financial             
    adviser.