10:25 CHINA SCI-TECH<00985> - Announcement & Resumption (2) The gross proceeds from the New Shares Placing and the CN Placing will be about HK$120 million. The net proceeds from the New Shares Placing and the CN Placing will be about HK$115 million, of which not less than HK$58 million will be used for possible further investment in Shijiazhuang Shuanghuan Automobile Co. Ltd. and the remaining balance of net proceeds will be used for other investments when opportunities are identified and as the Directors consider appropriate. In the event that no appropriate investment opportunities is identified, the net proceeds will be used as general working capital of the Company. A circular containing, among other things, further details of the Consolidation, the New Shares Placing, the CN Placing; the renewal of general mandates to issue and repurchase New Shares and the extension of the general mandate to issue further New Shares repurchased by the Company under the authorisation of the Repurchase Mandate and a notice of the EGM for the purpose of approving, inter alia, (i) the Consolidation; (ii) the New Shares Placing, (iii) the CN Placing and (iv) the renewal of general mandates to issue and repurchase New Shares and the extension of the general mandate to issue further New Shares repurchased by the Company under the authorisation of the Repurchase Mandate will be despatched by the Company to the Shareholders as soon as practicable in accordance with the Listing Rules. Pursuant to the Listing Rule, any refreshment of the general mandates to issue and repurchase New Shares before the next annual general meeting requires any controlling shareholders and their associates or, where are no controlling shareholders, directors (excluding independent non-executive directors) and the chief executive of the issuer and their respective associates to abstain from voting in favour. An independent board committee will be established and an independent financial adviser will be appointed to advise the independent Shareholders in respect of the renewal of the general mandates to issue and repurchase New Shares. Trading in the Shares was suspended at the request of the Company with effect from 9:30 a.m. on 1 February 2005 pending the release of this announcement. An application has been made by the Company to the Stock Exchange for the trading in the Shares to resume from 9:30 a.m. on 4 February 2005 following the publication of this announcement. PROPOSED CONSOLIDATION OF SHARES The Board is pleased to announce that the Company proposes to consolidate every ten Shares into one New Share. The existing board lot of 2,000 Shares for trading on the Stock Exchange will be changed to the board lot of 8,000 New Shares upon the Consolidation taking effect. As at the date of this announcement, the authorised capital of the Company is HK$500,000,000 divided into 50,000,000,000 Shares of which 15,174,846,004 Shares have been issued and fully paid. Immediately after the Consolidation, the authorised share capital of the Company will be HK$500,000,000 comprising 5,000,000,000 New Shares, of which not less than 1,517,484,600 New Shares will be in issue and fully paid, which figure will be adjusted for any Shares issued between the date of this announcement and the Consolidation. The New Shares will rank pari passu in all respects with each other. As at the date of this announcement, there are certain outstanding convertible notes of the Company which are convertible into Shares. Appropriate adjustment will be made to the conversion price of the convertible notes pursuant to the terms and conditions of the convertible notes and will be announced in further announcement or in the circular to be despatched in relation to the Consolidation. Fractional entitlements of New Shares arising from and upon the Consolidation will be aggregated and sold for the benefit of the Company. The Consolidation will not, of itself, alter the underlying assets, business operations, management or financial position of the Company and its subsidiaries as a result of the Consolidation, save as regards, the de-minimis impact arising out of the treatment of fractional entitlements as referred to above. Conditions of the Consolidation The Consolidation is conditional upon, among other things, the Stock Exchange granting or agreeing to grant the listing of and permission to deal in the New Shares and the passing of an ordinary resolution by the Shareholders at the EGM to approve the Consolidation. Listing An application will be made to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the New Shares. Reasons for the Consolidation According to Rule 13.64 of the Listing Rules, where the market price of the securities of the issuer approaches the extremities of HK$0.01 or HK$9,995.00, the Stock Exchange reserves the right to require the issuer either to change the trading method or to proceed with a consolidation or splitting of its securities. Since the Shares have been trading below ten cents, the Directors believe that the