10:09     SINOCHEM HK<00297>-Announcement & Resumption of Trading(11)         

    Aggregate                                                                 
    46.78                                                                     
    55.2                                                                      
                                                                              
    17.79                                                                     
    53.0                                                                      
                                                                              
    11.86                                                                     
    50.9                                                                      
                                                                              
                                                                              
    Total global consumption                                                  
    84.76                                                                     
                                                                              
    Total global consumption                                                  
    33.55                                                                     
                                                                              
    Total global consumption                                                  
    23.27                                                                     
                                                                              
    Source:FAOSTAT data, 2004                                                 
                                                                              
    Since the 1990s, the total consumption of fertilisers in the PRC          
    maintained a steady growth from 33.18 Mt in 1994 to 44.12 Mt in           
    2003, growing at a CAGR of approximately 3.22% (Source: China             
    Statistical Yearbook 2004). The directors of the Fertiliser Group         
    believe that the demand for fertiliser products in the PRC will           
    be driven by the following factors in the future:                         
                                                                              
    .   the demand for agricultural products to satisfy the basic             
    consumption need of the large population in the PRC;                      
                                                                              
    .   the growth of livestock husbandry and the increasing demand           
    for feed crops;                                                           
                                                                              
    .   reducing total arable land due to urbanization and the                
    importance of fertilisers to increase crop yields;                        
                                                                              
    .   structural change of the agricultural industry towards                
    high-quality cash crop; and                                               
                                                                              
    .   the government policy to develop the agricultural industry.           
                                                                              
    The Directors consider that the PRC fertiliser industry presents          
    promising growth potential and the Acquisition will enable the            
    Company to participate in the growth of the PRC fertiliser                
    industry.                                                                 
                                                                              
    A unique opportunity to become a leading fertiliser supplier and          
    the largest fertiliser importer in the PRC                                
                                                                              
    While the PRC is one of the major fertiliser production and               
    consumption countries, the Fertiliser Group is a leading                  
    fertiliser enterprise in the PRC and the largest fertiliser               
    importer in the PRC in terms of import volume. The Directors              
    consider that the Acquisition represents an attractive                    
    opportunity for the Group to immediately become a leading player          
    in the PRC fertiliser industry.                                           
                                                                              
    A means to immediately enhance earnings capability and net asset          
    value                                                                     
                                                                              
    A summary of the financial information of the Fertiliser Group            
    is included in paragraph C headed Particulars of the Fertiliser           
    Group above. The Directors expect that the Acquisition will bring         
    an immediate and substantial contribution to the earnings of the          
    Group. In addition, there will be a significant increment in the          
    net asset value of the Group, thereby enhancing the value for             
    Shareholders as a whole.                                                  
                                                                              
    A structure enabling the Company to become the listed flagship            
    company of Sinochem Corporation                                           
                                                                              
    Upon Completion, the Company will be ultimately majority                  
    controlled by Sinochem Corporation, which is one of the largest           
    state-owned enterprises in the PRC in terms of turnover and has           
    been listed among the Fortune Global 500 companies for 15                 
    consecutive years and ranked 270th in 2004. It also ranks 7th             
    among all Chinese industrial companies in terms of turnover. As           
    the only Hong Kong listed flagship company for Sinochem                   
    Corporation, the Company would be able to leverage on the global          
    business network of Sinochem Corporation for future development.