09:18 CHINA ASSETS<00170> - Announcement (2) - the investment manager of the Company recommends such disposal to the Directors and the Directors remain of the view that the disposal is in the interest of the Company; - for a disposal to be effected by way of placing:- (i) the placing price is subject to a maximum 15% discount to the prevailing market price at the time of placement; (ii) in any event, the placing price is or is greater than US$4.26 per ADS, being 15% discount to US$5.01 which is the lowest trading price of ADS since its initial public offering which the Directors consider that it is a reasonable minimum price to be adopted; (iii) all the KongZhong Shares to be placed are placed with parties who themselves and their beneficial owners are Independent Third Parties; and -if KongZhong Shares are disposed of through the open market they will be disposed of at the prevailing market price at the time of disposal. The Company considers that disposal of 9.1% of its KongZhong Shares through the open market may negatively affect the share price of KongZhong. To remain flexible and depending on the market conditions at the time of disposal, the Company may dispose of its KongZhong Shares through the open market or by way of placing. Since the actual placing price has not been determined and the market price for the disposal through open market is unknown, it is not possible to calculate the profit or loss that will arise on the disposal of KongZhong Shares. For reference purpose only, the closing price of ADS as at 22 February was US$9.20, on the basis of the minimum price of US$4.26 per ADS (being a price calculated at a 15% discount to the lowest trading price of ADS since its initial public offering) and the total number of 125,282,520 KongZhong Shares (equivalent to 3,132,063 ADS) that the Company intends to dispose of, the disposal would result in the Group reporting an estimated gross profit of approximately US$12.27 million (approximately HK$95.70 million). As at 31 December 2003, the investment in KongZhong Shares is classified as "investments" in the consolidated balance sheet of the Group and stated at cost at US$1.20 million (approximately HK$9.36 million). Reasons for proposing the disposal of shares in KongZhong The disposal allows the Company to realise its successful investment and increase the amount of cash flow for other investments if and when attractive opportunities arises. The Directors believe that the proposal for the disposal including the placing price is fair and reasonable and in the interests of the Shareholders as a whole. Information On The Company, Kongzhong The Company is an investment company listed under Chapter 21 of the Listing Rules, investing in various business sectors including technologies and technologies-related service areas, life science companies and bio-technological companies. KongZhong is a leading wireless value-added service provider in the People's Republic of China. General A circular containing, amongst other things, details of the possible disposal will be despatched to Shareholders in due course. The Directors as at the date of this announcement are Mr. Lao Yuan Yi and Mr. Wang Jun Yan as executive directors, Mr. Jiang Wei, Mr. Yeung Wai Kin and Mr. Zhao Yu Qiao as non-executive directors, Mr. Peter Duncan Neil Robertson, Mr. Fan Jia Yan and Mr. Wu Ming Yu as independent non-executive directors. Definitions In this announcement, unless the context requires otherwise, the following terms have the meanings set out below:- "ADS" American Depositary Share. Each ADS represents 40 KongZong Shares; "Announcement" the announcement of the Company dated 15 July 2004 in respect of the disposal of 367,937 ADS, representing 14,717,480 KongZhong Shares, which was completed on 14 July 2004;