09:27     BAOYE GROUP<02355> - Announcement (2)                               

    conditionally agreed to dispose of his 19% of equity                      
    interests in Building Materials Industrialisation                         
    Company. The consideration for the Acquisition is                         
    RMB11,514,000 (equivalent to approximately                                
    HK$10,862,264).                                                           
                                                                              
    Particulars of the Acquisition Agreement are set out                      
    in the paragraph headed "Acquisition Agreement" of                        
    this announcement.                                                        
                                                                              
    As Mr Pang is an executive Director and a substantial                     
    shareholder of the Company, the Acquisition                               
    constitutes a connected transaction for the Company                       
    under the Listing Rules. Since each of applicable                         
    percentage ratios under Rule 14.07 of the Listing                         
    Rules is less than 2.5%, the Acquisition is only                          
    subject to the reporting and announcement                                 
    requirements set out in Rules 14A.45 and 14A.47 of                        
    the Listing Rules and is exempt from the independent                      
    shareholders' approval requirements under Chapter                         
    14A of the Listing Rules.                                                 
                                                                              
    Pursuant to the articles of association of the Company,                   
    approval from the Shareholders is required for any                        
    contract, transaction or arrangement entered into                         
    between a Director and the Company. Accordingly, the                      
    Directors propose to seek the Shareholders' approval                      
    of the Acquisition Agreement at the EGM by way of a                       
    poll. Mr Pang will abstain from voting at the EGM as                      
    he is materially interested in the Acquisition                            
    Agreement.                                                                
                                                                              
    A circular containing, among other things, details                        
    of the Acquisition Agreement and the notice of EGM                        
    will be despatched to the Shareholders as soon as                         
    practicable.                                                              
                                                                              
    The terms of the Acquisition Agreement have been                          
    negotiated on an arm's length basis. The Directors,                       
    including the independent non-executive Directors,                        
    consider that the terms of the Acquisition Agreement                      
    are on normal commercial terms and are fair and                           
    reasonable as far as the Shareholders as a whole are                      
    concerned.                                                                
                                                                              
    CONSTRUCTION AGREEMENT                                                    
    The principal terms of the Construction Agreement are                     
    as follows:                                                               
                                                                              
    Date    :       26 February 2005                                          
                                                                              
    Parties :       (1)     Baoye Construction, a non-wholly                  
    owned subsidiary of the Company                                           
                                                                              
    (2)     Minghua Textile                                                   
                                                                              
    Particulars                                                               
    Pursuant to the Construction Agreement, Baoye                             
    Construction has conditionally agreed to perform                          
    certain design, construction and installation work                        
    of Zhejiang Textile Raw Material Exhibition City                          
    Textile Raw Material Trade Centre (#). The construction site is located at
    Minghua Village, Yaqian Town, Xiaoshan District (#). The Construction     
    Agreement is                                                              
    expected to be completed within 300 days.                                 
                                                                              
    Consideration                                                             
    The total consideration for the design, construction                      
    and installation work under the Construction                              
    Agreement amounts to RMB116,023,788 (equivalent to                        
    approximately HK$109,456,404), payable by Minghua                         
    Textile to Baoye Construction in the manner as set                        
    out under the paragraph headed "Payment terms" below.