Reference is made to the Exchanges announcement dated 24 August 2001 ("Exchanges Announcement ") setting out guidelines for eligible Main Board issuers with negative or negligible net tangible asset value which did not arise from operational losses (the "Guidelines") to apply for the adoption of the modified assets test for the purposes of classifying de-minimis thresholds of connected transactions. Capitalised terms used herein shall have the same meanings as those defined in the Exchanges Announcement, unless otherwise stated.

The Modified Calculation Concession, in accordance with the Guidelines, is extended to Rule 14.25(2)(b)(i) of the Listing Rules and the modification of the percentage ratio threshold is from 15% of the book value of the net tangible assets to 5% of the Modified Assets. Therefore, when the total value of the financial assistance of an eligible Main Board issuer, as set out in Rule 14.25(2)(b)(i), exceeds 5% of the Modified Assets, then the issuer will be required to comply with the disclosure requirement as set out in that rule.

The Securities and Futures Commission has granted its consent under Rule 2.04 of the Main Board Listing Rules for the modification of such relevant requirements in the Listing Rules.

Adoption of Modified Calculation Concession

As set out in the Guidelines, the modified assets test under the Modified Calculation Concession uses "the gross assets of the issuer less intangibles and current liabilities" as the basis for comparison. Such Modified Assets under the Modified Calculation Concession will be adopted in Rule 14.25(2)(b)(i) of the Listing Rules as the basis for comparison to determine the disclosure requirements. Percentage ratio thresholds prescribed under this rule will be amended from 15% of the book value of the net tangible assets to 5% of the Modified Assets.

Eligibility, conditions and application procedures

Main Board issuers who wish to apply for adoption of the modified assets test, with appropriate variations, under the Modified Calculation Concession in respect of the above must have negative or negligible net tangible asset value which did not arise from operational losses. Main Board issuers are subject to the same eligibility guidelines, conditions and application procedures as set out in the Exchanges Announcement.