09:34     SHOUGANG GRAND<00730> - Announcement (2)                            

    The Capital Increase Agreement                                            
    On 15 March 2005, Jeckman Holdings, Valuework and                         
    Shenzhen Jiayinda entered into the Capital Increase                       
    Agreement. To the best of the Directors' knowledge,                       
    information and belief, having made all reasonable                        
    enquiry, each of Valuework and Shenzhen Jiayinda and                      
    their respective controlling owners is an independent                     
    third party and not a connected person of the Company                     
    or any of its subsidiaries or any of their respective                     
    directors, chief executive and substantial                                
    shareholders or any associates of any of them.                            
                                                                              
    Pursuant to the Capital Increase Agreement, the                           
    parties have agreed to increase the registered capital                    
    of South China Leasing from US$5,000,000 (equivalent                      
    to approximately HK$39,000,000) to US$24,000,000                          
    (equivalent to approximately HK$187,200,000). The                         
    registered capital of South China Leasing will remain                     
    to be owned as to 60% by Jeckman Holdings, as to 20%                      
    by Valuework and as to 20% by Shenzhen Jiayinda after                     
    the Capital Increase. The Capital Increase will be                        
    contributed by Jeckman Holdings, Valuework and                            
    Shenzhen Jiayinda in proportion to their existing                         
    shareholding interests in South China Leasing.                            
                                                                              
    Jeckman Holdings' share of the capital increase will                      
    be US$11,400,000 (equivalent to approximately                             
    HK$88,920,000) and will be financed by the Group's                        
    internal resources.                                                       
                                                                              
    Conditions                                                                
    The parties' obligation to contribute to the Capital                      
    Increase is conditional upon approval of the Capital                      
    Increase by the relevant PRC authority.                                   
                                                                              
    If South China Leasing fails to obtain the approval                       
    for the Capital Increase from the relevant PRC                            
    authority by 31 December 2005, or any later date that                     
    the parties may agree in writing, the Capital Increase                    
    Agreement will become null and void and each of the                       
    parties will have no obligation to make any                               
    contributions to the Capital Increase.                                    
                                                                              
    If the approval from the relevant PRC authority is                        
    obtained, each of the parties shall contribute its                        
    share of the Capital Increase to South China Leasing                      
    in accordance with PRC regulatory requirements.                           
                                                                              
    South China Leasing                                                       
    South China Leasing is principally engaged in the                         
    financial leasing business, including the leasing of                      
    machinery, equipment, electrical equipment, meters,                       
    motor vehicles and the leasing of immovable properties,                   
    in the PRC. It is a Sino-foreign equity joint venture                     
    established in the PRC on 20 May 1989 with an operation                   
    term of 40 years expiring in 2029. The board of                           
    directors of South China Leasing comprises 5 directors,                   
    of which Jeckman Holdings has the right to appoint                        
    3 directors. Subsequent to the Asian financial crisis                     
    in 1997, South China Leasing's financial leasing                          
    business had been affected and it had ceased to develop                   
    new business and focused only on the maintenance of                       
    existing contracts and the collection and recovery                        
    of outstanding debts. Prior to the acquisition by the                     
    Company, South China Leasing has suspended its                            
    operation. The Directors consider the financial                           
    leasing market in the PRC presents a lot of                               
    opportunities due to the improved economy in line with                    
    the recovery from the Asian financial crisis and                          
    through South China Leasing, which has an existing                        
    and valid business license, could shorten the                             
    Company's initiative in establishing a financial                          
    leasing business in the PRC.