10:47     INTERCHINA HOLD<00202> - Announcement (3)                           

    HK$35,849,000).                                                           
                                                                              
    The Group is in the course of arranging for project financing             
    with banks in the PRC regarding the amount representing the               
    difference between the total investment amount of RMB124,539,000          
    (equivalent to approximately HK$118,000,000) and the registered           
    capital of approximately RMB38,000,000 (equivalent to                     
    approximately HK$35,849,000), which will be advanced by the               
    Group prior to completion of the sewage treatment plants in               
    accordance with the progress of construction.                             
                                                                              
    The WFOE is yet to be set up by the Group, but the Group does             
    not intend to impose any restrictions on any subsequent sale              
    of the equity interests in the WFOE.                                      
                                                                              
    2.      To be responsible for the financing of the Sewage Treatment       
    Plants Project.                                                           
                                                                              
    3.      To be responsible for the construction of the sewage treatment    
    plants in Zhuozhou, Hebei Province, the PRC, within 24 months             
    from the commencement of the relevant construction and provide            
    performance bond to the PRC Party through a bank in the sum of            
    RMB1,000,000 (equivalent to approximately HK$943,000), which              
    was determined after arm's length negotiations between the Group          
    and the PRC Party, which is in line with the normal practice              
    of sewage plant constructions in the PRC. Save as provision of            
    such performance bond and the total investment amount of the              
    WFOE, there are no other guarantee and/or other commitment by             
    the Group in relation to the Sewage Treatment Plants Project.             
                                                                              
    4.      To participate in the design of the sewage treatment plants       
    and bear all costs and expenses in relation thereto.                      
                                                                              
    5.      To compile a system in relation to construction quality           
    control.                                                                  
                                                                              
    6.      To operate trial sewage treatments after completion of            
    construction.                                                             
                                                                              
    7.      To maintain and operate the sewage treatment plants after         
    they have started formal operations.                                      
                                                                              
    Termination:    1.      Upon the occurrence of force majeure events       
    (such as war and natural disasters), the parties to the                   
    Co-operation Agreement shall negotiate whether to terminate the           
    Co-operation Agreement or delay performance of the same.                  
                                                                              
    2.      In the event the construction of sewage treatment plants and      
    satisfactory trial operations were delayed for four months from           
    the date on which satisfactory trial operations were originally           
    set to be completed pursuant to the Co-operation Agreement, or            
    in the event of any breach of the Co-operation Agreement by the           
    Group rendering the Co-operation Agreement cannot be performed            
    further, the PRC party is entitled to terminate the Co-operation          
    Agreement.                                                                
                                                                              
    3.      In the event of any breach of the Co-operation Agreement by       
    the PRC Party rendering the Co-operation Agreement cannot be              
    performed further, the Group is entitled to terminate the                 
    Co-operation Agreement.                                                   
                                                                              
    REASONS FOR ENTERING INTO THE CO-OPERATION AGREEMENT                      
                                                                              
    The Group is principally engaged in the investment in                     
    environmental and water treatment operation and city development          
    and investment operation as well as strategic investment in Hong          
    Kong and the PRC. The environmental and water treatment                   
    operations have provided a steady stream of income to the Group.          
    The Directors believe that