09:26 CS CONSERVAT P<00351> - Announcement (2) view. The Stock Exchange has indicated that it has not accepted the classification of the Acquisition as a discloseable transaction and that the Acquisition is a very substantial acquisition and hence should be subject to the relevant Listing Rules including Shareholders' approval. The Stock Exchange is looking into the matter and may make further enquiries, if necessary. Further announcement will be made as and when appropriate. A circular containing the details of the Acquisition will be despatched to the Shareholders as soon as practicable. Unusual change in trade volume and Share price The Board has noted the increases in the price and trade volume of the Shares today, and wishes to state that the Board is not aware of the reasons for such increases, save for the Acquisition and as disclosed below: 1. The Company is under a preliminary negotiation with a third party which is not Beijing Yuk Chak nor a connected person of the Company in relation to the proposed acquisition of a company involving in the waste incineration and processing business and no agreement has been reached at the moment; and 2. Mr. Cheng Kin Chow, Tony, an independent non-executive Director, has disposed of 150,000 Shares in the market at a price of HK$0.65 per Share today. Shareholders and potential investors are advised to exercise caution when dealing in the Shares. Save as aforesaid, the Board also confirms that there are no negotiations or agreements relating to any intended acquisitions or realizations, which are discloseable under Rule 13.23 of the Listing Rules. Neither is the Board aware of any matter, discloseable under the general obligation imposed by Rule 13.09 of the Listing Rules, which is or may be of a price-sensitive nature. Made by the order of the Board, the Directors of which individually and jointly accept responsibility for the accuracy of the above statement. ACQUISITION AGREEMENTS Reference is made to the Company's announcements dated 27 August 2004 and 14 September 2004 respectively and circular dated 6 October 2004, in relation to, among other things, the signing of the LOI on the proposed acquisition of the Equity Interest, representing approximately 32.89% equity interest in BCS General Energy & Environment. The Company is pleased to announce that Asset Palace entered into the Acquisition Agreements dated 21 December 2004 and 4 March 2005 with Beijing Yuk Chak for the acquisition of the Equity Interest from Beijing Yuk Chak. To the best of knowledge, information and belief of the Directors, Beijing Yuk Chak and whose ultimate beneficial owners are not connected persons of the Company and are independent of the Company and its connected persons. Consideration and Payment Terms The Consideration is HK$20,000,000, which shall be satisfied in the following manner: (i) HK$10,000,000, which has been set off against the earnest money deposited by Abba China with Beijing Yuk Chak pursuant to the LOI; (ii) as to HK$9,000,000 by payment in cash upon the signing of the acquisition agreement dated 21 December 2004; and (iii) as to the balance of HK$1,000,000 by payment in cash within 7 business days upon receipt of the approval from the relevant government authorities agreeing to convert BCS General Energy & Environment into a sino-foreign joint venture and the issue of the amended approval certificate and/or business licence of BCS General Energy & Environment. The Company finances part of the Consideration by the net proceeds of approximately HK$19,000,000 raised from the issue of the Convertible Notes. The intended use of the net proceeds in respect of the Convertible Notes as stated in the Company's announcement dated 25 June 2004 was for future investment in waste incineration and processing business in the PRC. The Directors are of the view that such use of the net proceeds is in-line with the Company's original plan. The Company intends to finance the balance of the Consideration of HK$1,000,000 from the Group's working capital. The latest audited and unaudited net asset values of BCS General Energy & Environment for the year ended 31 December 2003 and the six months ended 30 June 2004 were approximately