10:12     SINOCHEM HK<00297>-Announcement & Resumption of Trading(15)         

    Sinochem Corporation will not and will procure that its                   
    subsidiaries will not (except for the Company and its                     
    subsidiaries and Sinochem Corporation's various remaining                 
    investments and subsidiaries which are engaged in the production          
    of fertilisers), without the prior consent of the Company,                
    develop, operate or assist in operating, participate in or                
    conduct any business which may compete with the business carried          
    on by the Fertiliser Group, either on its own or jointly with or          
    on behalf of any other person or company in the PRC. Further              
    details regarding the Non-competition Undertaking will be                 
    disclosed in the Circular.                                                
                                                                              
    J.   THE CAPITAL REORGANISATION                                           
                                                                              
    Overview                                                                  
                                                                              
    The Board also proposes the Capital Reorganisation which                  
    comprises:                                                                
                                                                              
    (i)   the Capital Reduction;                                              
                                                                              
    (ii)   the Share Consolidation;                                           
                                                                              
    (iii)   an increase in the authorized share capital of the                
    Company;                                                                  
                                                                              
    (iv)   the Existing Share Premium Cancellation; and                       
                                                                              
    (v)   the Further Share Premium Cancellation.                             
                                                                              
    (i)   Capital Reduction                                                   
                                                                              
    The Directors propose that the Capital Reduction be effected in           
    the following manner:                                                     
                                                                              
    (a)   the nominal value of all issued Ordinary Shares of HK$0.10          
    each will be reduced by HK$0.09 per Ordinary Share by cancelling          
    an equivalent amount of paid-up capital per Ordinary Share so that        
    the nominal value of each such Ordinary Share will be reduced from        
    HK$0.10 to HK$0.01; and                                                   
                                                                              
    (b)   the entire credit arising from such reduction will be               
    transferred to the contributed surplus account of the Company.            
                                                                              
    (ii)   Share Consolidation                                                
                                                                              
    The Directors also propose that, subject to and immediately after         
    the Capital Reduction, every 10 Reduced Shares of HK$0.01 each            
    then in issue be consolidated into one New Share of HK$0.10.              
                                                                              
    (iii)   Increase in authorised share capital                              
                                                                              
    The existing authorized share capital of the Company is                   
    HK$1,000,000,000 divided into 6,840,000,000 Ordinary Shares of            
    HK$0.10 each and 316 Preference Shares of HK$1,000,000 each. It           
    is proposed that the authorized share capital of the Company 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)   Existing Share Premium Cancellation                                
                                                                              
    The Directors further propose that the entire balance standing            
    to the credit of the share premium account of the Company as at           
    31 March 2004 be cancelled, and the credit arising from the               
    Existing Share Premium Cancellation be transferred to the                 
    contributed surplus account of the Company.                               
                                                                              
    (v)   Further Share Premium Cancellation                                  
                                                                              
    The Directors propose that, 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, be            
    cancelled and the credit arising from the Further Share Premium           
    Cancellation be transferred to the contributed surplus account            
    of the Company.                                                           
                                                                              
    Utilisation of credits                                                    
                                                                              
    The credit arising from the Capital Reduction is expected to              
    amount to approximately HK$331,154,845 on the basis of a total            
    of 3,679,498,284 Ordinary Shares in issue as at the date of this          
    announcement and assuming no further Ordinary Shares will be              
    issued between the date of this announcement and the date on which        
    the Capital Reduction becomes effective.                                  
                                                                              
    The entire amount standing to the credit of the Company's share           
    premium account as at 31 March 2004 was approximately                     
    HK$749,182,000 which will give rise to a credit of the same amount        
    under the Existing Share Premium Cancellation.