09:28     LUOYANG GLASS<01108> - Announcement (1)                             

    The Stock Exchange of Hong Kong Limited takes no responsibility for       
    the contents of this announcement, makes no representation as to its      
    accuracy or completeness and expressly disclaims any liability            
    whatsoever for any loss howsoever arising from or in reliance upon the    
    whole or any part of the contents of this announcement.                   
                                                                              
    Luoyang Glass Company Limited                                             
    (a joint stock limited company incorporated in the People's Republic      
    of China with limited liability)                                          
                                                                              
    (Stock Code: 1108)                                                        
                                                                              
    MAJOR AND CONNECTED TRANSACTIONS                                          
    FORMATION OF JOINT VENTURES                                               
                                                                              
                                                                              
    The Board of the Company wishes to announce that on 26 May 2005, the      
    Company entered into the Long Hai Agreement and Long Hao Agreement        
    with CLFG, the controlling shareholder of the Company, for the purpose    
    of setting up Long Hai in order to, inter alia, engage in the             
    production and sale of ultra-thin glass and the processing of raw         
    materials for the production of glass related products and Long Hao to    
    engage in the production and sale of float glass and the provision of     
    related consultancy and technical support services.                       
                                                                              
    The registered capital of Long Hai is RMB60 million (approximately HK     
    $56.60 million), of which RMB48 million (approximately HK$45.28           
    million) (constituting approximately 80% thereof) will be contributed     
    by the Company and RMB12 million (HK$11.32 million) (constituting         
    approximately 20% thereof) will be contributed by CLFG. The total         
    investment for Long Hai Project is currently estimated to amount          
    RMB300 million (approximately HK$283.02 million).                         
                                                                              
    The registered capital of Long Hao is RMB50 million (approximately HK     
    $47.17 million), of which RMB40 million (approximately HK$37.74           
    million) (constituting approximately 80% thereof) will be contributed     
    by the Company and RMB10 million (HK$9.43 million) (constituting          
    approximately 20% thereof) will be contributed by CLFG. The total         
    investment for Long Hao Project is currently estimated to amount          
    RMB250 million (approximately HK$235.85 million).                         
                                                                              
    CLFG is the controlling shareholder (as defined in the Listing Rules      
    and the Shanghai Listing Rules) of the Company and is interested in       
    approximately 57.14% of the issued share capital of the Company.          
    Pursuant to Rule 14A.13(6) of the Listing Rules and Rule 10.1.3 of the    
    Shanghai Listing Rules, the transactions described above constitute       
    connected transactions for the Company under the Listing Rules and the    
    Shanghai Listing Rules. The transactions contemplated under the Long      
    Hai Agreement and Long Hao Agreement constitute major transactions for    
    the Company under the Listing Rules as the Company's capital              
    investment under the Long Hai Agreement and Long Hao Agreement exceed     
    25% of the average market capitalization of the Company for the five      
    business days immediately preceding the date of the Long Hai Agreement    
    and Long Hao Agreement. Therefore, the Company should make an             
    announcement and issue a circular containing the particulars of the       
    transactions and recommendation from an independent financial advisor     
    to the Independent Board Committee and the Independent H Shares'          
    Shareholders for the approval of the agreements and the investment of     
    the Company in Long Hai and Long Hao by the Independent H Shares'         
    Shareholders at the EGM. The transactions contemplated under the Long     
    Hai Agreement and Long Hao Agreement exceed RMB30 million and are         
    subject to the requirement of the Rule 10.2.5 of the Shanghai Listing     
    Rules. The transactions are subject to the approval of the Independent    
    Shareholders by poll.                                                     
                                                                              
    In view of CLFG and its associates' interests in Long Hai Agreement       
    and Long Hao Agreement, CLFG and its associates shall abstain from        
    voting at the EGM.                                                        
                                                                              
    The Company will send a circular containing, among other things, (i)      
    details of the terms and conditions of the Long Hai Agreement and Long    
    Hao Agreement; (ii) the recommendation from the Independent Board         
    Committee in respect of the Long Hai Agreement and Long Hao Agreement     
    to the Independent H Shares' Shareholders; and (iii) the advice of an     
    independent financial adviser to the Independent Board Committee and      
    the Independent H Shares' Shareholders in respect of the Long Hai         
    Agreement and Long Hao Agreement, to the H Shares' Shareholders in due    
    course. An independent financial adviser will be appointed to advise      
    the Independent Board Committee and the Independent H Shares'             
    Shareholders on these transactions.                                       
                                                                              
    For the concern of A Shares' Shareholders, please refer to the            
    announcement published on the newspapers, namely, China Securities and    
    Shanghai Securities Daily on 27 May 2005.