09:46     CHINA WATER<00855> - Announcement & Resumption (1)                  

    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.                                
                                                                              
    This announcement appears for information purposes only and               
    does not constitute an invitation or offer to acquire,                    
    purchase or subscribe for the securities.                                 
                                                                              
    CHINA WATER AFFAIRS GROUP LIMITED                                         
    (Incorporated in the Cayman Islands and continued in Bermuda              
    with limited liability)                                                   
    (Stock code: 855)                                                         
                                                                              
    PLACING OF EXISTING SHARES                                                
    AND SUBSCRIPTION FOR NEW SHARES                                           
                                                                              
    Placing Agent                                                             
                                                                              
    China Everbright Securities (HK) Limited                                  
                                                                              
    The Placing Agreement and the Subscription Agreement were                 
    entered into on 4th April, 2005. Pursuant to the Placing                  
    Agreement, the Placing Agent has agreed to procure to place to            
    not less than 6 independent placees 57,600,000 Shares (being              
    the Placing Shares) held by the Vendor at the price of HK$0.50            
    per share on a best endeavour basis. Pursuant to the                      
    Subscription Agreement, the Vendor has agreed to subscribe for            
    and the Company has agreed to allot and issue to the Vendor               
    the New Shares subject to the granting of the listing of, and             
    permission to deal in, the New Shares by the Stock Exchange               
    and completion of the Placing.                                            
                                                                              
    The Placing Shares represent approximately 11.97% of the                  
    existing issued share capital of the company of 481,301,700               
    Shares and approximately 10.69% of the Company's issued share             
    capital as enlarged by the issue of the New Shares.                       
                                                                              
    The Vendor, which is legally and beneficially owned by Duan               
    Chuan Liang, an executive Director, is a substantial                      
    shareholder of the Company and currently holds approximately              
    26.89% of the Company's existing issued share capital. The                
    Vendor will hold approximately 24.02% of the issued share                 
    capital of the Company as enlarged by the allotment of the New            
    Shares immediately after completion of the Placing and the                
    Subscription.                                                             
                                                                              
    The net proceeds from the Subscription are estimated to be                
    approximately HK$28.1 million. It is the intention of the                 
    Directors to use the net proceeds from the Subscription as to             
    HK$3.0 million for working capital purposes and the remaining             
    HK$25.1 million for future investments in city water supply               
    business and sewage treatment business in the PRC. As at the              
    date of this announcement, the Company has not identified any             
    specific projects to invest in.                                           
                                                                              
    At the request of the Company, the Shares have been suspended             
    from trading on the Stock Exchange from 11:11 a.m. on 4th                 
    April, 2005 and application has been made to the Stock                    
    Exchange for resumption of trading from 9:30 a.m. on 7th April,           
    2005.                                                                     
                                                                              
    PLACING UNDER THE PLACING AGREEMENT                                       
    Vendor:   Assets Full Resources Limited. As at the date of the            
    Placing Agreement, it holds 129,432,301 Shares, representing              
    approximately 26.89% of the existing issued share capital of              
    the Company (which comprises of 481,301,700 Shares).                      
                                                                              
    Number of Placing Shares:   57,600,000 Shares, representing               
    approximately 11.97% of the existing issued share capital of              
    the Company, and approximately 10.69% of the issued share                 
    capital of the Company as enlarged by the issue of the New                
    Shares. The Placing Shares are beneficially owned by the                  
    Vendor.