09:56 ANHUI CONCH<00914> - Announcement (4) (Unit: RMB) Item Face value Appraised value Remarks Equipment 217,071,218 250,207,000 Equipment includes machinery and equipment, non-production ancillary facilities and construction-in-progress Fixed assets 193,519,395 208,695,000 Fixed assets include buildings and land use rights for 50 years over a land in Fusui County, Chongzuo City, Guangxi Province of 349,197 sq.m. Intangible assets 66,473,445 73,647,000 Intangible assets include limestone mining rights for 30 years Total assets 477,064,058 532,549,000 The face value of liabilities of Fusui Company to be assumed by Xinning Conch as at the Fusui Valuation Date amounted to RMB273,733,245 ( equivalent to approximately HK$258,238,910), which was mainly comprised of bank loans and certain payables. Accordingly, as at the Fusui Valuation Date, the difference between the appraised value of the assets to be acquired and the face value of liabilities to be assumed by Xinning Conch was RMB258,815,755 (equivalent to approximately HK$244,165,807), which is the appraised value of the assets to be acquired less the face value of liabilities to be assumed. The difference between the value of the newly added assets and newly incurred liabilities during the period from the Fusui Valuation Date to the Fusui Completion Date was determined by reference to the estimated face value of the newly added assets and newly incurred liabilities during the aforesaid period. The aforesaid estimated values were arrived after the discussion between the management of Xinning Conch and Fusui Company and taking into account the production requirements of a clinker production line of similar nature. It was estimated that from the Fusui Valuation Date to the Fusui Completion Date, the newly added assets amounted to approximately RMB68,340,816 (equivalent to approximately HK$ 64,472,468), the newly incurred liabilities amounted to approximately RMB 54,494,269 (equivalent to approximately HK$51,409,688) and the difference between the newly added assets and the newly incurred liabilities amounted to approximately RMB13,846,547 (equivalent to approximately HK$13,062,780 ). Accordingly, the consideration for the Fusui Project amounted to about RMB272,662,302 (equivalent to approximately HK$257,228,587), which was determined by reference to the sum of the difference between the value of the assets to be acquired and the amount of liabilities to be assumed by Xinning Conch as at the Fusui Valuation Date and the difference between the estimated value of newly added assets and newly incurred liabilities during the period from the Fusui Valuation Date to the Fusui Completion Date. Fusui Company has not yet commenced operation as the dry process clinker production line is currently under construction and accordingly, Fusui Company and its cement and clinker related assets have not yet generated any revenue or profits up to 31 March 2005. Payment of consideration The Group would use its working capital to pay the consideration for the Fusui Project. The Group had paid Fusui Company a deposit of RMB100,000, 000 (equivalent to approximately HK$94,339,623) in April 2005. According to the terms of the Fusui Assets Disposal and Acquisition Agreement, Xinning Conch paid RMB158,815,755 (equivalent to approximately HK$149,826 ,184) in cash to Fusui Company on the Fusui Completion Date and would pay the remaining about RMB13,846,547 (equivalent to approximately HK$13,062, 780) to Fusui Company in cash within 15 days after the Fusui Completion Date. II. REASONS FOR THE ASSETS ACQUISITIONS The Group is principally engaged in the production and sale of cement and commodity clinker.