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.

Kwong Hing International Holdings (Bermuda) Limited

(Incorporated in Bermuda with limited liability)

PROPOSED CAPITAL REORGANISATION INVOLVING

A REDUCTION OF ISSUED SHARE CAPITAL

AND SUBDIVISION OF UNISSUED SHARE CAPITAL,

GRANT OF GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

AND

CHANGE IN BOARD LOT SIZE

The Board proposes to effect the Capital Reorganisation pursuant to which (i) the paid-up capital and nominal value of all the issued Shares will be reduced from HK$0.10 to HK$0.01 each by cancellation of HK$0.09 paid up capital on each issued Share; (ii) every authorised and unissued Share will be sub-divided into 10 New Shares; and (iii) the credit of HK$144,990,000 arising from the Capital Reduction will be applied as to HK$22,338,242 towards the elimination of the entire accumulated losses of the Company as at 31st March, 2001 with the balance thereof to be transferred to the contributed surplus account of the Company.

The Board also proposes that the board lot size for trading on the Stock Exchange be changed from 2,000 Shares to 20,000 New Shares upon the Capital Reorganisation becoming effective, which is expected to take place on or about 23rd October, 2001.

The SGM will be convened to approve the relevant resolution regarding the Capital Reorganisation. At the SGM, separate ordinary resolutions will also be proposed to renew the general mandates given to the Directors to issue and repurchase New Shares.

A circular containing, among other things, details of the Capital Reorganisation, change in board lot size, arrangements of odd lot facilities, arrangements for free exchange of certificates for the New Shares upon the Capital Reorganisation becoming effective and the grant of the general mandates to issue and repurchase New Shares and a notice convening the SGM will be sent to the Shareholders and, for information only, to the holders of the share options granted under the Share Option Scheme as soon as practicable.

PROPOSED CAPITAL REORGANISATION

The Board proposes to effect the Capital Reorganisation pursuant to which:

1. the paid-up capital and nominal value of all the issued Shares will be reduced from HK$0.10 to HK$0.01 each by cancellation of HK$0.09 paid-up capital on each issued Share;

2. every authorised and unissued Share will be sub-divided into 10 New Shares; and

3. the credit of HK$144,990,000 arising from the Capital Reduction on the basis of 1,611,000,000 Shares in issue will be applied as to HK$22,338,242 towards the elimination of the entire accumulated losses of the Company as at 31st March, 2001, being the date to which the latest published audited accounts of the Company were drawn up, with the balance thereof to be transferred to a contributed surplus account of the Company, which may be used in future for such purposes as the Board may direct subject to the Companies Act and the Bye-laws.

REASONS FOR THE CAPITAL REORGANISATION

The Company had accumulated losses of HK$22,338,242 as at 31st March 2001. The Capital Reduction will allow the Company to eliminate the accumulated losses and as a result, will enable the Company to declare dividends to Shareholders at an earlier opportunity than by generating profits to offset such losses. At present, the Board has no intention to declare any dividend to Shareholders.

The Board also noted that the Shares have been traded at prices below their nominal value of HK$0.10 each for a majority of the trading days since September 2000. With a view to facilitating any capital fund-raising exercise or asset acquisition by way of allotment or placement of Shares when the Board considers the circumstances so require in the future, the Board considered that the Capital Reorganisation is in the best interests of the Company and the Shareholders as a whole.

EFFECTS OF THE CAPITAL REORGANISATION

As at the date of this announcement, the authorised share capital of the Company was HK$500,000,000 divided into 5,000,000,000 Shares of which HK$161,100,000 divided into 1,611,000,000 Shares were issued and credited as fully paid. Immediately upon the Capital Reorganisation becoming effective and on the basis that 1,611,000,000 Shares will be in issue immediately prior to the Capital Reduction becoming effective, the authorised share capital of the Company will be HK$500,000,000 divided into 50,000,000,000 Shares of which HK$16,110,000 divided into 1,611,000,000 Shares will be in issue and credited as fully paid.

As at the date of this announcement, options to subscribe for a total of 3,000,000 Shares granted under the Share Option Scheme were still outstanding. Assuming that all of the outstanding share options were to be exercised in full prior to the effective date of the Capital Reorganisation, an additional 3,000,000 Shares would be in issue and an additional credit of HK$270,000 would arise from the Capital Reduction. Such credit, if so arise, will also be transferred to the contributed surplus account of the Company. In addition, the exercise price of these share options may have to be adjusted in accordance with the rules of the Share Option Scheme as a result of the Capital Reorganisation becoming effective. If any option granted under the Share Option Scheme may become or remains exercisable on the effective date of the Capital Reorganisation, the Company will request the auditors of the Company to provide a certificate as to the adjustment (if any) required to be made in accordance with the rules of the Share Option Scheme once the Capital Reorganisation becomes effective.

The Capital Reorganisation will not, of itself, alter the underlying assets, business operations, management or financial position of the Company or the proportionate interests of the Shareholders, except for the payment of the related expenses. The Board believes that the Capital Reorganisation will not have any adverse effect on the financial position of the Company and its subsidiaries.

CONDITIONS OF THE CAPITAL REORGANISATION

The Capital Reorganisation is conditional on the fulfillment of the following conditions:

(1) the passing by the Shareholders of a special resolution at the SGM to be convened by the Company approving the Capital Reorganisation;

(2) the publication of a notice in Bermuda in respect of the Capital Reduction in accordance with the Companies Act; and

(3) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the New Shares.

APPLICATION FOR LISTING

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the New Shares.

CHANGE IN BOARD LOT SIZE AND TRADING ARRANGEMENTS

The proposed change in board lot size will increase the value of each board lot of New Shares and such increase is expected to result in a reduction of the transaction costs for dealings in the Shares.

In order to facilitate the trading of odd lots (if any), the Company will procure an agent to arrange for the sale and purchase of odd lots on behalf of the Shareholders and potential investors. The Company will also make available arrangements to the Shareholders for the free exchange of existing share certificates for new share certificates for the New Shares upon the Capital Reorganisation becoming effective. Further details of the effective date of the change in board lot size of the shares of the Company and the arrangements for odd lot facilities and free exchange of share certificates will be announced by the Company as soon as practicable.

GENERAL MANDATES TO ISSUE AND REPURCHASE NEW SHARES

In connection with the reduced share capital as a result of the Capital Reorganisation, the Directors will seek the approval of Shareholders to grant to the Directors a general mandate to allot and issue New Shares up to a maximum of 20% of the aggregate nominal amount of the share capital of the Company in issue immediately following the Capital Reorganisation and to allot and issue further New Shares purchased by the Company pursuant to the purchase mandate referred to below.

The Directors will also seek the approval of Shareholders to grant to the Directors a general mandate to purchase New Shares up to a maximum of 10% of the aggregate nominal amount of the share capital of the Company in issue immediately following the Capital Reorganisation.

EXPECTED TIMETABLE

The SGM is expected to be held on or about 22nd October, 2001. It is expected that the effective date of the Capital Reorganisation will be 23rd October, 2001, the business day immediately after the SGM. Further announcement regarding the expected timetable for the Capital Reorganisation and the procedures for free exchange of certificates for the New Shares will be made as soon as practicable.

GENERAL

The New Shares that will be in issue upon the Capital Reorganisation becoming effective will rank pari passu in all respects with each other, having the rights attached thereto as set out in the Bye-laws.

DEFINITIONS

“Board”	the board of Directors
“Bye-laws”	the bye-laws of the Company
“Capital Reduction”	the cancellation of HK$0.09 paid-up capital for each issued Share
“Capital Reorganisation”	the reorganisation of the capital of the Company by way of the Capital Reduction and Subdivision
“Companies Act”	the Companies Act 1981 of Bermuda
“Company”	Kwong Hing International Holdings (Bermuda) Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the Stock Exchange
“Directors”	directors of the Company
“New Shares”	new ordinary shares of HK$0.01 each in the share capital of the Company immediately after the Capital Reduction and Subdivision;
“SGM”	the special general meeting of the Company to be convened for the purpose of considering the Capital Reorganisation and the grant of the general mandates
“Shares”	ordinary shares of HK$0.10 each in the existing share capital of the Company
“Share Option Scheme”	the share option scheme of the Company adopted on 3rd March, 1997
“Shareholder(s)”	holder(s) for the time being of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subdivision”	the proposed subdivision of the authorised but unissued Shares (including those unissued Shares arising from the Capital Reduction) into 10 New Shares following the Capital Reduction
“HK$”	Hong Kong dollars

By Order of the Board

Li Man Ching

Chairman

Hong Kong, 4th September, 2001

Please also refer to the published version of this announcement in the i Mail dated 5/9/2001.