11:23     HK CONSTRUCTION<00190> - Announcement (5)                           

    negotiation of the terms and conditions of the Equity                     
    Transfer Agreements                                                       
    Project Company I was established on 29 December 2004.                    
    Project Company II is expected to be established by                       
    the end of April 2005. So far as the Directors are                        
    aware, no business activity has been carried out by                       
    Project Company I since its incorporation.                                
                                                                              
    The business scope of Project Company I and Project                       
    Company II is and will both be wind power plant. The                      
    Project Companies will be engaged in the business of                      
    investment in, and construction and                                       
    operation/management of, two 30 megawatts wind power                      
    plants in Heilongjiang, the PRC, under Project (Phase                     
    I) and Project (Phase II) respectively.                                   
                                                                              
    The total investment and registered capital of both                       
    Project Companies are RMB300 million and HK$100                           
    million respectively. No contribution has been made                       
    to the registered capital of any of the Project                           
    Companies.                                                                
                                                                              
    After the shareholders of the respective Project                          
    Companies have made their respective capital                              
    contributions in accordance with their proportionate                      
    equity holdings, each of Project Company I and Project                    
    Company II will reimburse the Transferor for the costs                    
    and expenses already incurred and/or to be incurred                       
    by the Transferor on behalf of the relevant Project                       
    Companies for Project (Phase I) and Project (Phase                        
    II), being about HK$38 million for each, that is, a                       
    total of about HK$76 million. Such amounts will be                        
    subject to further verification by Sinoriver and APC.                     
    Such sums include: (i) costs and expenses for                             
    preparation of documents for submission to the                            
    competent PRC authorities for approval of the                             
    Projects including the relevant technical and                             
    feasibility surveys and reports, consultancy reports,                     
    environmental impact studies; and (ii) costs for                          
    acquiring the sites of the Projects, access roads,                        
    transmission cables and transformer facilities for                        
    the Projects. Apart from such arrangements, there are                     
    no side agreements to give any monetary compensation                      
    or benefits to the Transferor.                                            
                                                                              
    Upon contribution of the respective registered                            
    capital commitments by all the relevant shareholders                      
    to the respective Project Companies, each joint                           
    venture partner will be entitled to receive the                           
    after-tax profits after contribution to the reserve                       
    funds and making up previous accumulated losses, if                       
    any, in proportion to its ratio of registered capital                     
    in the respective Project Companies.                                      
                                                                              
    Save for the costs and expenses of a total amount of                      
    about HK$76 million to be reimbursed to the Transferor                    
    by the Project Companies, no business activity had                        
    been undertaken by Project Company I since its                            
    incorporation and Project Company II has not yet been                     
    established as at the date of this announcement.                          
                                                                              
    The Group will finance its contribution to the                            
    registered capital and total investment of the                            
    Project Companies from its internal resources and                         
    bank borrowings.  Currently, the Group has cash over                      
    HK$200 million.                                                           
                                                                              
    The terms of the Equity Transfer Agreements were                          
    determined after arm's length negotiations between