09:50 MACROLINK INT'L<00472>-Announcement&Resumption of Trading-7 Based on the unaudited management financial statements as at 30th September, 2004 of the First Target Group, the net asset value and total assets of the First Target Group as at 30th September, 2004 are approximately HK$70.10 million and approximately HK$117.09 million respectively. For the two financial years ended 31st December, 2003 and the nine months ended 30th September, 2004, the First Target Group recorded an unaudited net profit after taxation and minority interest of approximately HK$8.02 million, HK$16.04 million and HK$14.12 million respectively. During the same periods, it recorded an unaudited net profit before taxation and minority interest of approximately HK$8.02 million, HK$15.96 million and HK$13.87 million respectively. The Second Target Company The Second Target Company is principally engaged in the manufacturing and sale of grape wine in the PRC. The Second Target Company is owned as to approximately 75% by the First Target Company and 25% by the Malaysia Vendor. Based on the unaudited management financial statements as at 30th September, 2004 of the Second Target Company, the net asset value and total assets of the Second Target Company as at 30th September, 2004 are approximately HK$17.63 million and approximately HK$50.63 million respectively. For the financial year ended 31st December, 2003, and the nine months ended 30th September, 2004, the Second Target Company recorded an unaudited net loss of approximately HK$0.29 million and HK$0.95 million respectively and accordingly no tax was required to be paid for such periods. REASONS FOR THE ACQUISITIONS The Group is currently engaged in the manufacturing and trading of healthcare and electronic products. The Group is striving to explore new area of business and revenue sources. In order to do so, it has been seeking to develop more businesses to capitalize on market opportunities. According to the National Alcoholic Drinks Making Industry Information published in March 2004 by China Light Industry Information Centre (which, based on the understandings of the Company, is an administrative department of China National Council of Light Industry responsible for guiding, managing and coordinating the information work of light industries in the PRC), the production of grape wine in the PRC has increased from approximately 302,200 tones in 2002 to approximately 343,000 tones in 2003, representing an increase of approximately 13.5%. In addition, according to the same publication published by China Light Industry Information Centre in December 2004, for the nine months ended 30th September, 2004, the production of grape wine in the PRC was approximately 238,796 tones, representing an increase of 18.44% compared to 201,614 tones for the same period in 2003. The growth in the production of grape wine for the year 2004 was one of the fastest amongst the various kinds of wine in the PRC. Based on the unaudited management financial statements as at 30th September, 2004 of the First Target Group, revenue derived from the sale of grape wine and Tibetan naked barley wine has increased by approximately 37.68% compared to the same period in 2003. Given the potential of the PRC grape wine and Tibetan naked barley wine market, the Directors believe that the Acquisitions would be instrumental to the Group in successfully implementing its business strategy and explore a new category of business. Upon the completion of the Acquisitions, the Group would gain a manufacturing capacity of wine in the PRC. In addition, the First Target Company has made arrangements with the Beijing Vendor under which the Beijing Vendor Group has agreed to purchase not less than HK$80 million worth of grape wine and Tibetan naked barley wine from the First Target Group for the financial year ended 31st December, 2005. This will ensure a steady sales volume of wine and a stable source of business for the Group. Moreover, three of the Directors, Mr. Fu Kwan, Mr. Wu Xiang Dong and Mr. Shu Shi Ping have experience and expertise in the management of wine-related businesses in the PRC. The Directors consider the terms of the Agreements have been made on normal commercial terms and are fair and reasonable and the Acquisitions are in the interest of the Company and the Shareholders as a whole. The independent non-executive Directors will give their recommendations on the Acquisitions to the Independent Shareholders after they have received the advice of the independent financial adviser to be appointed.