10:26     CHINA HAIDIAN<00256> - Announcement (4)                             

    shareholders of Citychamp; and (ii) the Company                           
    obtaining all necessary approvals in relation to the                      
    formation of Dartong.                                                     
                                                                              
    If the above conditions are not fulfilled on or before                    
    30 September 2005 (or such other date as the parties                      
    to the Agreement may agree), the Agreement will lapse.                    
                                                                              
    REASONS FOR THE FORMATION OF DARTONG                                      
                                                                              
    Enamelled copper wires are used in electrical                             
    machinery, home appliances, telecommunication                             
    equipment, vehicles and measuring devices. The PRC                        
    has become the worldwide manufacturing and processing                     
    centre after entering into the World Trade                                
    Organisation. Numerous international manufacturing                        
    enterprises have relocated their factories to the PRC                     
    in recent years and as a result, there is an enormous                     
    demand for enamelled copper wires in the PRC. Moreover,                   
    the high growth in the PRC electricity industry                           
    results in a high demand for enamelled copper wires                       
    since these wires are essential for all electrical                        
    generators, machinery, transformers and many other                        
    electricity-related accessories.                                          
                                                                              
    The enamelled copper wires to be produced by Dartong                      
    will be used in colour display and colour picture tube                    
    in televisions. They will also be used in frequency                       
    conversion machinery and air-conditioning                                 
    compressors. The Citychamp Group is also engaged in                       
    the manufacturing and sale of enamelled copper wires                      
    in the PRC. However, the enamelled copper wires                           
    produced by the Citychamp Group have lower heat                           
    resistance than those of Dartong and the Citychamp                        
    Group's customer base is different from those                             
    targeted by Dartong.                                                      
                                                                              
    The Citychamp Group has been engaged in the                               
    manufacturing and sale of enamelled copper wires in                       
    the PRC for more than 30 years and has built up the                       
    technical know-how of producing enamelled copper                          
    wires. Therefore, the Directors consider that the                         
    formation of Dartong with Citychamp will provide the                      
    Company with a good opportunity to capture the growth                     
    of the enamelled copper wires industry in the PRC.                        
    In addition, the formation of Dartong will help to                        
    diversify the Group's revenue sources. As such, the                       
    Directors consider that the formation of Dartong is                       
    in the interests of both the Company and the                              
    Shareholders. They also consider that the terms of                        
    the Agreement are fair and reasonable and in the                          
    interests of the Company and the Shareholders.                            
                                                                              
    GENERAL                                                                   
                                                                              
    The Group is principally engaged in the manufacturing                     
    and sale of watches and clocks, and property                              
    investment and development, manufacturing and                             
    distribution of timber products.                                          
                                                                              
    The formation of Dartong constitutes a "discloseable                      
    transaction" for the Company under the Listing Rules.                     
                                                                              
    A circular containing, among other things, details                        
    of the Agreement will be despatched to the                                
    Shareholders as soon as practicable.                                      
                                                                              
    DEFINITIONS                                                               
                                                                              
    In this announcement, unless the context otherwise                        
    requires, the following terms shall have the                              
    following meanings:                                                       
                                                                              
    "Agreement"     the joint venture agreement dated