09:38     COSMOS MACH<00118> - Announcement (3)                               

    (ii)    in the view that the Company, being the                           
    controlling shareholder of GTPL, is listed on the main                    
    board of the Stock Exchange, GTPL shall procure that                      
    the Agreement complies with the requirements of the                       
    Stock Exchange;                                                           
                                                                              
    (iii)   obtaining approval of the Agreement from the                      
    relevant government authorities in the PRC and the                        
    new foreign-invested enterprises business license                         
    documents in respect of Grand Plastic Machine having                      
    been issued by the relevant government authorities                        
    in the PRC.                                                               
                                                                              
    5.      REASONS FOR ENTERING INTO THE AGREEMENT                           
    The Group is principally engaged in manufacturing and                     
    trading of plastic injection moulding machines and                        
    industrial tools. It is the Group's strategy to                           
    strengthen its capital structure and to reallocate                        
    resources for use in a more effective way. The                            
    Directors consider that the Acquisition is in line                        
    with the Group's current business strategy.                               
    Accordingly, the Directors, including the                                 
    independent non-executive Directors, also consider                        
    that the Agreement is on normal commercial terms and                      
    the terms of the Agreement are in the interest of the                     
    Company and are fair and reasonable so far as the                         
    Company and its shareholders as a whole are concerned.                    
                                                                              
    6.      GENERAL                                                           
    As far as the Company is aware, WX Factory is                             
    principally engaged in manufacturing of facilities                        
    for plastic industry.                                                     
                                                                              
    As Grand Plastic Machine is a non-wholly owned                            
    subsidiary of the Company, WX Factory being a                             
    substantial shareholder of Grand Plastic Machine, is                      
    a connected person of the Company within the meaning                      
    of the Listing Rules and the Acquisition therefore                        
    constitute a connected transaction of the Company and                     
    is subject to reporting and announcement requirements                     
    under Chapter 14A of the Listing Rules.                                   
                                                                              
    7.      DEFINITIONS:                                                      
    "Acquisition"   the acquisition of 24% equity interest                    
    in Grand Plastic Machine by GTPL from WX Factory                          
    pursuant to the terms and conditions of the Agreement                     
                                                                              
    "Agreement"     the transfer agreement dated 3rd May, 2005                
    and entered into between GTPL and WX Factory in                           
    respect of the acquisition of 24% equity interest in                      
    Grand Plastic Machine by GTPL from WX Factory                             
                                                                              
    "Board" board of Directors                                                
                                                                              
    "Company"       Cosmos Machinery Enterprises Limited (#), a company       
    incorporated in Hong Kong                                                 
    with limited liability, whose securities are listed                       
    on the Stock Exchange                                                     
                                                                              
    "Directors"     directors of the Company (including                       
    independent non-executive directors)                                      
                                                                              
    "Grand Group"   Wuxi Grand Tech Machinery Group Ltd.                      
    (#), a Sino-foreign joint venture                                         
    established in the PRC and a non-wholly owned                             
    subsidiary of the Company                                                 
                                                                              
    "Grand Plastic Machine" Wuxi Grand Plastic Machine                        
    Manufacture Co., Ltd (#), a                                               
    Sino-foreign joint venture established in the PRC and                     
    a non-wholly owned subsidiary of the Company