09:28 SNP LEEFUNG<00623> - Announcement (4) is reasonable given the fact that by having the Call Option, the Company is able to lock in the pricing mechanism for the purchase of the remaining 40% interest in Yau Yue, which may only take place in 3 or 4 years' time. The Call Option may be exercised only in whole by the Company in writing to the Vendors (i) within one month after the publication by the Company of its audited consolidated accounts for the year ending 31 December 2007 provided that the aggregate Net Profit for the Relevant Period is not less than HK$30 million; or (ii) within one month after the publication by the Company of its audited consolidated accounts for the year ending 31 December 2008 if the aggregate Net Profit for the Relevant Period is less than HK$30 million. The Company has also granted to the Vendors the option to require the Company to purchase all the Put Option Shares (which shall not be less than 40% of the issued share capital of Yau Yue) at an aggregate consideration of an amount equal to a 20% discount on 40% of the audited net asset value (ex-Dividend) of Yau Yue as at 31 December 2008. Given that the Put Option is exercised at the discretion of the Vendors, the Directors consider it appropriate to build in some protection for the Company and accordingly the consideration for the purchase of the Put Option Shares is set at a 20% discount on the net asset value of Yau Yue. The Put Option may be exercised only in whole by the Vendors collectively if the Net Profit for the Relevant Period is less than HK$30 million and only in writing to the Company within one month after the publication by the Company of its audited consolidated accounts for the year ending 31 December 2008. If the aggregate Net Profit for the Relevant Period exceeds HK$60 million, then upon completion of the sale and purchase of the Call Option Shares, the Company shall pay to the Vendors an additional aggregate sum equal to 5% of the Call Option Consideration. A notice of exercise of the Call Option shall be deemed to have been served by the Company if either (i) the aggregate Net Profit for the Relevant Period is more than HK$30 million; or (ii) the aggregate Net Profit for the period from 1 January 2005 to 31 December 2008 is more than HK$40 million, each as determined by Yau Yue's auditors. In the event that the aggregate Net Profit for the Relevant Period is less than HK$30 million and the aggregate Net Profit for the period from 1 January 2005 to 31 December 2008 is less than HK$40 million, the Company has the discretion to determine whether to exercise the Call Option. The Put Option shall only be exercisable if the Call Option has not been exercised at the relevant time and vice versa. Completion of the sale and purchase of the Call Option Shares pursuant to the exercise of the Call Option or the sale and purchase of the Put Option Shares pursuant to the exercise of the Put Option, as the case may be, is subject to compliance by the Company with all relevant rules of the Listing Rules relating to such exercise. The Company will comply with Chapter 14 of the Listing Rules if the Call Option or the Put Option is exercised. INFORMATION ON YAU YUE Yau Yue is incorporated in Hong Kong with limited liability on 8 January 1988. Yau Yue is principally engaged in the production of corrugated box and sheets in the People's Republic of China. The principal assets of Yau Yue are trade receivables, plant and machinery and inventories for the operation of its business. Yau Yue is owned as to 61.75%, 33.25% and 5% by Keep Happy, Winter Stars and Ms. Zhang respectively as at the date of this announcement. The audited net asset value of Yau Yue was approximately HK$47.3 million and HK$35.6 million as at 31 March 2004 and 31 March 2003 respectively. The following table shows the audited results of Yau Yue for the two years ended 31 March 2004: For the year ended For the year ended 31 March 2004 31 March 2003 (Audited) (Audited) HK$'million HK$'million Turnover 261.9 227.3 Profit before taxation 34.3 24.9 Profit after taxation 31.9 22.7 Upon Completion, the Company will be interested in 60% of the issued share capital of Yau Yue and Yau Yue will become a subsidiary of the