08:57 YONGLONG<08211> - Announcement & Resumption of Trading (1) This announcement is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities. The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. ZHEJIANG YONGLONG ENTERPRISES CO., LTD.* (a joint stock limited company incorporated in the People's Republic of China) (Stock Code: 8211) ANNOUNCEMENT PLACING OF NEW H SHARES AND RESUMPTION OF TRADING Reference is made to the Announcement. The Board is pleased to announce that it has obtained the approval for the issue of not more than 225,500,000 H Shares (including the 209,500,000 Subscription Shares and the 16,000,000 Placing Shares) from the CSRC on 23 February, 2005. On 8 March, 2005, the Company entered into the Placing Agreement with the Placing Agent, pursuant to which the Company agreed to appoint the Placing Agent as the sole agent for the placing, on a fully underwritten basis, of an aggregate of 16,000,000 new H Shares at a price of HK$0.24 per H Share. The 16,000,000 Placing Shares to be placed pursuant to the Placing Agreement represent (i) 6.40% of the existing H Shares in issue, (ii) 1.91% of the existing total registered capital of the Company; (iii) approximately 3.36% of the total H Shares in issue as enlarged by the issue of the Subscription Shares and the Placing Shares and (iv) approximately 1.5% of the total registered capital of the Company as enlarged by the issue of the Subscription Shares and the Placing Shares. The Placing Price was determined after arm's length negotiation between the Company and the Placing Agent and with reference to the prevailing market prices of the H Shares. The Placing Price represents (i) a discount of approximately 9.06% to the closing price of HK$0.265 per H Share as quoted on the Stock Exchange on 4 March, 2005, being the last trading day of the H Shares immediately preceding the date of this announcement, and (ii) a discount of approximately 9.27% to the average closing price of approximately HK$0.259 per H Share for the last five trading days ended 4 March, 2005. The Placing is conditional upon (i) the Stock Exchange granting approval for the listing of, and permission to deal in, the Placing Shares; (ii) the obtaining of all consents and approvals from the relevant governmental authorities in the PRC in relation to the issue and allotment of the Placing Shares, including but not limited to the approval for the issue of the Placing Shares by the CSRC; and (iii) the obligations of the Placing Agent becoming unconditional and not being terminated in accordance with the terms of the Placing Agreement. The Placing is one of the conditions precedent to the Subscription. However, completion of the Subscription is not a condition precedent to the Placing. Shareholders and potential investors should note that the Placing is subject to fulfillment of the conditions precedent on or before the Long Stop Date. Shareholders and potential investors are reminded to exercise caution when dealing in the H Shares. The Placing is subject to termination on the occurrence of, among other things, any event of force majeure (which include events set out in the paragraph headed "Termination and force majeure for the Placing" below) at or before 10:00 a.m. on the Closing Date. The net proceeds from the Placing in the amount of approximately HK$3,441,000 together with the net proceeds from the issue of the Subscription Shares in the amount of approximately HK$49,680,000 will be used as to 60% for the establishment or acquisition of a dying factory in the PRC and as to 20% for research and development of technology of the Group and as to 20% for the general working capital of the Group. Trading in the H Shares on the GEM was suspended at the request of the Company with effect from 9:30 a.m. on 7 March, 2005 pending the release of this announcement. Application has been made to the Stock Exchange for the resumption of trading in its H Shares with effect from 9:30 a.m. on 9 March, 2005. By Order of the Board Sun Li Yong Chairman Zhejiang, the PRC, 8 March, 2005