10:36     <00275> & <00235>-Joint Ann. & <00235> Resumed (7)                  

    Save for the proposed distribution in specie of the GDI Shares            
    pursuant to the China Strategic Group Reorganisation, China Strategic     
    has not formulated any future dividend policy.                            
                                                                              
    The China Strategic Circular containing, among other things, details      
    of the China Strategic Group Reorganisation, the pro forma financial      
    information on the China Strategic Group and the GDI Group after the      
    China Strategic Group Reorganisation, a notice convening a general        
    meeting of China Strategic, the letter of recommendation from the         
    independent board committee of China Strategic to the Independent         
    China Strategic Shareholders and the letter of advice from Hercules,      
    the independent financial adviser, to the independent board committee     
    of China Strategic and the Independent China Strategic Shareholders,      
    will be sent to the China Strategic Shareholders as soon as               
    practicable.                                                              
                                                                              
    CAPITAL REORGANISATION                                                    
                                                                              
    The China Strategic Board also proposes the Capital Reorganisation,       
    which involves the Capital Reduction, the Subdivision and the Share       
    Consolidation.                                                            
                                                                              
    Capital Reduction and Subdivision                                         
                                                                              
    The Capital Reduction will involve the cancellation of the paid-up        
    capital of HK$0.05 on each issued China Strategic Share and reduction     
    in the nominal value of each issued China Strategic Share from HK$0.10    
    to HK$0.05. The Capital Reduction also involves the cancellation of       
    the entire share premium account of China Strategic. The Subdivision      
    involves the subdivision of each authorised but unissued China            
    Strategic Share into two Reduced China Strategic Shares of HK$0.05        
    each.                                                                     
                                                                              
    As at the date of this announcement, the authorised share capital of      
    China Strategic is HK$800,000,000 divided into 8,000,000,000 China        
    Strategic Shares of HK$0.10 each, of which 881,595,087 China Strategic    
    Shares are in issue and fully paid or credited as fully paid. On the      
    assumption that no further China Strategic Shares will be issued after    
    the release of this announcement and up to the effective date of the      
    Capital Reorganisation, a credit of approximately HK$44,079,754 will      
    arise in the books of China Strategic as a result of the cancellation     
    of the paid-up capital of HK$0.05 on each issued China Strategic          
    Share. Based on the unaudited accounts of China Strategic as at 30th      
    June, 2004, a credit of approximately HK$1,900,916,000 will arise as a    
    result of the cancellation of the entire share premium account of         
    China Strategic. A total credit of approximately HK$1,944,995,754 will    
    arise from the Capital Reduction and will be transferred to the           
    special capital reserve account of China Strategic. China Strategic       
    had an unaudited special capital reserve of approximately                 
    HK$414,881,000 as at 30th June, 2004, which amount will be increased      
    to approximately HK$2,359,876,754 upon completion of the Capital          
    Reduction. Such special capital reserve will then be set off against      
    the accumulated deficit of China Strategic, which amounted to             
    approximately HK$1,081,825,000 as at 30th June, 2004. The balance of      
    special capital reserve account will become approximately                 
    HK$1,278,051,754 after setting off in full the accumulated deficit of     
    China Strategic.                                                          
                                                                              
    The distribution in specie of the GDI Shares will then be made out of     
    the special capital reserve account of China Strategic. The exact         
    amount of the distribution will be determined as soon as the pro forma    
    net asset value of GDI is ascertained immediately prior to completion     
    of the China Strategic Group Reorganisation. Further announcement will    
    be made by China Strategic in accordance with the Listing Rules as and    
    when appropriate in this regard.                                          
                                                                              
    Set out below is the issued share capital, share premium, special         
    capital reserve and deficit position of China Strategic before and        
    after the Capital Reorganisation:                                         
                                                                              
                                                                              
    Special                                                                   
            Issued share                 Share                 capital        
            capital                premium                reserve             
    Deficit                                                                   
            HK$'000                HK$'000                HK$'000             
    HK$'000                                                                   
                                                                              
    As at 30th June, 2004        88,160                1,900,916              
    414,881                1,081,825                                          
                                                                              
    Balance upon completion                                                   
      of the Capital Reorganisation        44,080                -            
    1,278,052                -