10:29 BAUHAUS INTERNATIONAL (HOLDINGS) LIMITED<00483> - Ann. (2) Applicants under the Public Offer should pay, on application, the maximum price of HK$1.25 per Offer Share and a 1% brokerage, a 0.005% Stock Exchange trading fee, a 0.005% SFC transaction levy and 0.002% investor compensation levy imposed by SFC. SHKIS (for and on behalf of the Sponsor, the Joint Lead Managers and the Underwriters) may, with the consent of the Company, reduce the indicative Offer Price range below that as stated in the Prospectus (which is from HK$1.00 per Offer Share to HK$1.25 per Offer Share) at any time prior to the morning of the last day for lodging applications under the Public Offer. In such a case, notice of the reduction in the indicative Offer Price range will be published in the South China Morning Post (in English) and the Hong Kong Economic Journal (in Chinese) not later than the morning of the day which is the last day for lodging applications under the Public Offer. If applications for the Offer Shares have been submitted prior to the day which is the last day for lodging applications under the Public Offer, then even if the Offer Price is so reduced, such applications cannot be subsequently withdrawn. If, for any reason, the Offer Price is not agreed upon between SHKIS (for and on behalf of the Sponsor, the Joint Lead Managers and the Underwriters) and the Company by the Price Determination Time (expected to be at or before 9:00 a.m. on Friday, 6th May, 2005 and in any event not later than 12:00 noon on Monday, 9th May, 2005), the Share Offer will not proceed and will lapse. The Share Offer comprises the Public Offer of initially 9,100,000 New Shares and the Placing of initially 81,900,000 New Shares. For allocation purposes only, the number of the Public Offer Shares (after deducting 910,000 Offer Shares for PINK application forms) will be divided into two pools: pool A and pool B. The Public Offer Shares in pool A will be allocated on an equitable basis only to applicants who have validly applied for the Public Offer Shares with an aggregate subscription price of HK$5 million (excluding the brokerage, the Stock Exchange trading fee, the SFC transaction levy and the SFC investor compensation levy thereon) or less. The Public Offer Shares available in pool B will be allocated on an equitable basis only to applicants who have validly applied for Public Offer Shares with an aggregate subscription price of more than HK$5 million (excluding the brokerage, the Stock Exchange trading fee, the SFC transaction levy and the SFC investor compensation levy) and up to the total initial value of pool B. Investors should be aware that allocation ratios for applications in the two pools, as well as allocation ratios for applications in the same pool, are likely to be different. Where one of the pools is undersubscribed, the surplus Public Offer Shares will be transferred to the other pool to satisfy demand in that other pool and be allocated accordingly. Applicants can only receive an allocation of Public Offer Shares from any one pool but not from both pools and can only make applications to either pool A or pool B. Where there is over-subscription, allocation of the Public Offer Shares to applicants under the Public Offer will be based solely on the level of valid applications received under the Public Offer. The basis of allocation may vary, depending on the number of the Public Offer Shares validly applied for by applicants in each of pool A and pool B, but, subject to that, will be made strictly on a pro rata basis, although this could, where appropriate, include balloting, which would mean that some applicants may receive a higher allocation than others who have applied for the same number of the Public Offer Shares. Any application made for more than 100% of the Public Offer Shares initially available under pool A or pool B will be rejected. Multiple or suspected multiple applications within either pool or between pools will be liable to be rejected. In addition, applicants are required to undertake and confirm that they or the relevant beneficial owner(s) have not indicated and will not indicate an interest for, and have not received or been placed or allotted (including conditionally and/or provisionally) with, any Placing Shares. Applications where cheques or banker's cashier orders are dishonoured upon first presentation are liable to be rejected. The allocation of the Offer Shares between the Placing and the Public Offer is subject to reallocation. In connection with the Share Offer, the Company will grant to SHKIS (for and on behalf of the Sponsor, the Joint Lead Managers and the Underwriters) the Over-allotment Option (which will expire on a date which is 30 days from the date of the Prospectus) pursuant to which the Company may be required to allot and issue up to 13,650,000 additional new Shares to cover any over-allocation in the Placing. If the Over-allotment Option is exercised in full, the additional new Shares will represent approximately 3.9% of the Company's enlarged issued share capital upon exercise in full of the Over-allotment Option. Where the Over-allotment Option is exercised, a press announcement will be made.