09:29     BAOYE GROUP<02355> - Announcement (7)                               

    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.                                                              
                                                                              
    Reasons and benefits of the Acquisition                                   
    The audited net profit both before and after taxation                     
    of Building Materials Industrialisation Company for                       
    the year ended 31 December 2002 were approximately                        
    RMB17,660,287 (equivalent to approximately                                
    HK$16,660,648) and RMB12,472,914 (equivalent to                           
    approximately HK$11,766,900) respectively prepared                        
    in accordance with the PRC generally accepted                             
    accounting principles. The audited net profit both                        
    before and after taxation of Building Materials                           
    Industrialisation Company for the year ended 31                           
    December 2003 were approximately RMB20,225,488                            
    (equivalent to approximately HK$19,080,649) and                           
    RMB13,551,077 (equivalent to approximately                                
    HK$12,784,035) respectively prepared in accordance                        
    with the PRC generally accepted accounting principles.                    
    Given the positive profit growing trend of Building                       
    Materials Industrialisation Company, the Board is of                      
    the view that there are positive prospect and growth                      
    potential of Building Materials Industrialisation                         
    Company in the coming few years. As such, it is                           
    expected that the Acquisition will contribute                             
    positively to the future development of the Group.                        
                                                                              
    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.                                                                
                                                                              
    GENERAL                                                                   
    The Group is principally engaged in (i) the                               
    undertaking and implementation of construction                            
    projects; (ii) research and development, production                       
    and sale of building materials; and (iii) real estate                     
    development.                                                              
                                                                              
    DEFINITIONS                                                               
    Unless the context otherwise requires, capitalised                        
    terms used in this announcement shall have the                            
    following meanings:                                                       
                                                                              
    "Acquisition"   the acquisition of 19% of equity                          
    interests in Building Materials Industrialisation                         
    Company by the Company from Mr Pang pursuant to the                       
    terms and conditions of the Acquisition Agreement                         
                                                                              
    "Acquisition Agreement" an agreement dated 26                             
    February 2005 and entered into between the Company                        
    and Mr Pang in connection with the Acquisition                            
                                                                              
    "associate"     has the meaning ascribed to it under the                  
    Listing Rules                                                             
                                                                              
    "Baoye Construction"    #