EX-10.42 ASSET TRANSFER AGREEMENT






Exhibit 10.42




(English Translation)




ASSET TRANSFER AGREEMENT




entered into between




China United Telecommunications Corporation Limited




and




China Unicom Corporation Limited




16 November 2007




 









 








TABLE OF CONTENTS




	 	 	 
	Article 1

	 	Definition
	Article 2

	 	Transfer of assets
	Article 3

	 	Settlement of assets
	Article 4

	 	Profits and losses during the period
	Article 5

	 	Expenses and taxes
	Article 6

	 	Labor arrangements
	Article 7

	 	Representations, statements and warranties
	Article 8

	 	Conditions precedent
	Article 9

	 	Default and compensation
	Article 10

	 	Force majeure
	Article 11

	 	Information disclosure and confidentiality
	Article 12

	 	Survival
	Article 13

	 	Resolution of disputes
	Article 14

	 	Notification
	Article 15

	 	Conflict
	Article 16

	 	No assignment
	Article 17

	 	Severability
	Article 18

	 	No waiver
	Article 19

	 	Applicable law
	Article 20

	 	Language and copy
	Article 21

	 	Appendix of the Agreement
	Article 22

	 	Validity of the Agreement
	Appendix 1

	 	Introduction on the overall conditions of the Target Assets






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ASSET TRANSFER AGREEMENT



This agreement was entered into by the following two parties on 16 November 2007 in Beijing, the
People’s Republic of China (“China”):




	 	 	 
	Transferor:

	 	China United Telecommunications
Corporation Limited

(“Transferor” or “Unicom Group”)

Address: Room 615, Tower 3, Henderson Centre,

No. 18, Jianguomen Nei Ave., Beijing

Legal representative: Chang Xiaobing
	 	 	 
	Transferee:

	 	China Unicom Corporation Limited

(“Transferee” or “CUCL”)

Address: 12/F, Tower 1, Henderson Centre,

No. 18, Jianguomen Nei Ave., Beijing

Legal representative: Chang Xiaobing






WHEREAS:





	(1)	 	Unicom Group is a limited liability company established and validly existing according to
Chinese law, and operates integrated telecommunications businesses;
	 
	(2)	 	CUCL is a foreign invested enterprise established and validly existing according to Chinese
law, China Unicom Limited (“CUL”) holds 100% of its equity;
	 
	(3)	 	CUL is a company established and validly existing according to Hong Kong law, and its shares
have been listed in the Stock Exchange of Hong Kong, while its American Depository Receipts
have been listed in New York Stock Exchange;
	 
	(4)	 	In order to streamline the management structure of the group and the operational structure of
the company, Unicom Group intended to transfer to CUCL, CUCL intended to accept the transfer
of the target assets (“the Transfer of Assets”).




In view of the above and for the purposes of the Transfer of Assets, the Parties reached this
agreement on the basis of equality and mutual benefit through amicable discussion as follows:




Article 1 Definition



1.1 Unless otherwise specified in the Agreement (including the recitals and Appendix to the
Agreement), the following wordings should have the following meanings:








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	“Transferor” or “Unicom Group” 

	 	China United Telecommunications

Corporation Limited
	 
	 	 
	“Transferee” or “CUCL”

	 	China Unicom Corporation Limited
	 
	 	 
	“CUL” 

	 	China Unicom Limited
	 
	 	 
	“Guizhou Subsidiary” 

	 	China United Telecommunications
Corporation Limited, Guizhou Branch
(including its branches at regional,
city and county levels)
	 
	 	 
	“Target Assets” 

	 	Various relevant assets, rights and
liabilities of Unicom Group, Guizhou
Subsidary transferred to CUCL, that
means all the assets and interests
contained in the asset evaluation
report, as well as all the contracts,
agreements, certificates, business
operation information, documents and
files, land use rights and building
ownership related to those interests
and assets, and all the interests
thereunder and all the interests and
gains arising from the above assets
and interests after the Settlement
Date.
	 
	 	 
	“Transfer of Assets” 

	 	The act of transfer of the Target
Assets by the Transferor to the
Transferee under Clause 2.1 of the
Agreement
	 
	 	 
	“Asset Transfer Price” 

	 	The total amount of cash
consideration for the Transfer of
Assets agreed under Clause 2.2 of the
Agreement
	 
	 	 
	“Settlement Date” 

	 	The later of the date when all the
conditions precedent to the Transfer
of Assets specified in Clause 8.1 of
the Agreement are satisfied or the
end of the current month when both
parties waive in writing within the
scope permitted by the applicable
law, or any other date otherwise
agreed upon by the parties of the
Agreement.
	 
	 	 
	“Contracts where the Names have yet
been Changed”

	 	The contracts under the definition of
Clause 3.2 of the Agreement






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1.2 Unless otherwise expressly specified, when the Agreement refers to an article or a clause,
that reference should be an article or a clause of the Agreement.



1.3 The use of the wording “including” in the Agreement should be regarded as “including but not
limited to”.



1.4 When the Agreement refers to a party to the Agreement or any other agreement or document,
this should include the successor or permitted transferee of that party.



1.5 When the Agreement refers to any law or any provisions of any law, these should include the
amendment and re-enactment of that law, any provisions of any law substituting it or all the
regulations and legal documents promulgated according to it.



1.6 The headings of the articles and Appendix of the Agreement are inserted for convenience of
reading and they should not have any effect when this Agreement is interpreted.




Article 2 Transfer of assets



2.1 Pursuant to the terms and conditions of the Agreement, the Transferor agrees to transfer the
Target Assets that it holds (for the overall conditions of the Target Assets, please refer to
Appendix 1) to the Transferee on the Settlement Date agreed in the Agreement, and the
Transferee agrees to accept the transfer of the Target Assets.



2.2 The Transferor and the Transferee agree that RMB880 million shall be paid in cash as
consideration (“Asset Transfer Price”) of the Target Assets to be transferred by the
Transferor to the Transferee. In addition, the Transferee will assume the relevant
liabilities of the Target Assets.



2.3 The Transferor and the Transferee agree that on the following day after the Settlement Date
(to be postponed accordingly in case of any statutory holiday), the Transferee will make a
lump sum full payment of the Asset Transfer Price to the Transferor by remitting to the bank
account specified by the Transferor.



2.4 After the Settlement Date, the Transferee will become the title owner of the Target Assets.




Article 3 Settlement of assets



3.1 On the Settlement Date, unless otherwise specified in the Agreement, the Target Assets will
be deemed as legitimately owned by the Transferee; prior to the Settlement Date,


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 the relevant rights and obligations in respect of the Target Assets and other forms of
assets, debts, liabilities and obligations shall be undertook by the Transferor; as of the
Settlement Day, the relevant rights and obligations in respect of the Target Assets and
other forms of assets, debts, liabilities and obligations shall be undertaken by the
Transferee.



3.2 For the purposes of the transfer of the Target Assets, any outstanding contracts/agreements
entered into on behalf of Guizhou Subsidiary or its subsidiaries related to the Target Assets
and the interests thereof shall be assigned to the Transferee from the Settlement Date and
both parties have already entered into agreements and/or letters of consent with the relevant
third parties to those contracts/agreements with respect to the change of the party’s name; if
there are some of those contracts that the signing parties have not yet agreed to formally
change the party’s name (“Contracts where the Names have yet been Changed”) to the name of the
Transferee, then in respect of any such Contracts where the Names have yet been Changed, both
parties specially agreed as follows:



(1) Starting from the Settlement Date, the rights or obligations, gains or losses
under the Contracts where the Names have yet been Changed held by the Transferor shall
belong to the Transferee unless otherwise provided in the Agreement. The Transferor
agrees that any interests it receives or holds with respect to the Contracts where the
Names have yet been Changed are received or held as the trustee of the Transferee and
their titles shall belong to the Transferee. The Transferor shall hand over those
interests to the Transferee from time to time upon the Transferee’s requests;



(2) The Transferor will strictly follow the Transferee’s orders from time to time
to exercise or perform the rights and obligations under the Contracts where the Names
have yet been Changed, and shall not amend any Contracts where the Names have yet been
Changed or terminate any Contracts where the Names have yet been Changed;



(3) Any reasonable actual expenses incurred by the Transferor when performing the
obligations under Item (1) above of this Clause should be compensated by the
Transferee, except for those arising from the Transferor’s negligence, faults or other
reasons caused by the Transferor;



(4) If it is necessary for the Transferor to exercise the Transferee’s rights under
the Contracts where the Names have yet been Changed (including initiating litigation or
arbitration or other necessary actions) under the Transferor’s name,


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 then the Transferor should assist the Transferee to exercise those rights under the
Transferor’s name;



(5) Both parties shall make their best efforts to complete the procedures of name
change of the Contracts where the Names have yet been Changed as soon as possible
and/or obtain letters of consent from the other parties to the Contracts where the
Names have yet been Changed.



3.3 For any assets included in the Target Assets that require registrations for any transfers
(for example vehicles), after the Transferor has completed the delivery (transfer of
ownership) on the Settlement Date, the Transferee shall obtain the titles of those assets.
The Transferor agrees that it will cooperate with the Transferee to transfer those assets to
the Transferee or its local subsidiaries after the Settlement Date.



3.4 For any settlement matters that are not completed on the Settlement Date, both parties agree
that they will make their best efforts to complete them as soon as possible. Both parties
agree that they will take all measures (including but not limited to signing or causing other
people to sign any document, applying and obtaining any approval, consent and permission,
handling the registration, recording and filing formalities of the documents related to the
procedures) in order to ensure the completion of the settlement. For any related matters not
covered by the Agreement, both parties should make amicable discussion and handle them
properly.




Article 4 Profits and losses during the period



4.1 Both parties agree that during the period between the valuation basis date to the Settlement
Date, profits and losses generated by the Target Assets shall still be owned and undertaken by
the Transferor.



4.2 Both parties agree that after the Settlement Date, profits and losses generated by the Target
Assets shall be enjoyed and undertaken by the Transferee.




Article 5 Expenses and taxes



Both parties will pay their respective taxes when performing the Transfer of Assets pursuant to
Chinese laws, regulations and rules, and the expenses incurred for the discussion, preparation and
execution of the Agreement will be jointly borne by both parties.




Article 6 Labor arrangements



6.1 Both parties confirm that in the List of Staff on Record transferred together with the


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 Target Assets to the Transferee, those staff on record include all senior management
officers and ordinary employees.



6.2 Both parties confirm that the labor relationship with all the staff on record related to the
Target Assets before the Settlement Date and the social insurance, such as the pension,
medical benefits and unemployment insurance, of those staff shall be handled by the
Transferor. Starting from the Settlement Date, the labor relationship with all the staff on
record related to the Target Assets and the social insurance, such as the pension, medical
benefits and unemployment insurance, of such staff shall be assumed by the Transferee.



6.3 Any labor disputes caused by any changes to the employment contracts shall be borne and
solved by the Transferor and Transferee together.




Article 7 Representations, statements and warranties



7.1 Each party represents and warrants to each other party, with respect to itself, as follows:



(1) it possesses the legitimate rights and full power and authority to sign the
Agreement and perform the obligations under the Agreement and those obligations
constitute responsibilities with legal force and legally binding upon it pursuant to
the terms of the Agreement;



(2) the performance of the terms of the Agreement will not:



i. violate the stipulations of its company’s incorporation
documents and other relevant documents, or violating any laws, regulations or
requirements applicable to the company; or



ii. violate any material contracts, agreements, permits or other
instruments, or orders, judgments and decrees of courts, government departments
and regulatory authorities;



(3) during the process of the Transfer of Assets, and with respect to the
satisfaction of the conditions precedent and handling of matters such as the
formalities of the transfer and settlement of the assets etc, each party should discuss
thoroughly, cooperate closely with and actively support the other party;



(4) that it has signed and handled or will sign and handle all the necessary
documents and approvals according to the relevant laws, regulations and


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 requirements and take all necessary actions to ensure the legality and validity of
carrying out the Transfer of Assets mentioned in the Agreement;



(5) it will handle by itself or assist the other party to handle together any
matters related to the Transfer of Assets according to the requirements of the laws and
the stipulations of the Agreement, including but not limited to providing information
related to the Transferor, the relevant documents intended to be made and signed,
handling the relevant approval and registration formalities etc.



7.2 In addition to Clause 7.1, the Transferor makes the following representations, statements and
warranties to the Transferee:



(1) The Transferor is entitled to sell the Target Assets to the Transferee pursuant to
Chinese laws;



(2) From the date of the Agreement to the Settlement Date, the Transferor shall
operate and manage the Target Assets and its relevant businesses in the normal way and
make sure that the Target Assets will not have serious impairment;



(3) The Target Assets are legally owned by the Transferor, and the titles to the
Target Assets are clear and legitimate and there is no dispute;



(4) On the Settlement Date, there is no lien, mortgage, security, charge, leasing
(including but not limited to finance lease), permission or rights owned by other third
parties with respect to the Target Assets; and the Target Assets are not subject to any
mortgage or other encumbrance or the rights, conditions, orders, regulations of a third
party or other restrictions;



(5) All the staff transferred to the Transferee together with the Target Assets
pursuant to the Agreement are sufficient for the Transferee to continue to operate
fully and effectively all businesses of the Target Assets in the existing way;



(6) Other than the liabilities incurred in the normal operation of the Target
Assets, the Target Assets do not have any other liabilities (including contingent
liabilities) on the Settlement Date;



(7) The Transfer and/or the Target Assets have not committed any infringement of a
third party’s patent, copyright, proprietary technique, design, trademark, domain name,
goodwill or other acts of intellectual property rights protected


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 by law which may cause any material economic losses to the Transferee;



(8) The transfer of the Target Assets from the Transferor to the Transferee
pursuant to the Agreement will not constitute a breach of contracts or agreements to
which the Transferor is a party or violation of any applicable laws, administrative
regulations and rules, nor will this infringe the rights of any third party;



(9) There is no litigation, arbitration, claim or other legal procedure involving
the Target Assets which is carried out or pending or threatened to be carried out and
which is material or major or may have a material adverse impact on the Transferee’s
business operation and/or the Target Assets. There is also no claim demand which may
lead to a material adverse impact on the Transferee’s business operation and/or the
Target Assets, nor any facts which may lead to those litigation, arbitration, claim or
other legal procedure requirements; and



(10) There is no act on the part of the Transferor and/or the Target Assets which
seriously violates laws and regulations and may cause any material economic loss to the
Transferee or cause any material adverse impact on the business operation of the Target
Assets.



7.3 The representations, statements and warranties in Clauses 7.1 and 7.2 above are true,
complete and accurate in all aspects, and do not contain any misleading contents in any aspect
from the date the Agreement is signed to the Settlement Date.



7.4 The Transferor agrees that if the Transferee and/or its subsidiaries incur, suffer or result
in any losses, costs, expenses, claims or other legal responsibilities (including but not
limited to legal expenses) attributable to the above-mentioned representations and warranties
and any untrue or misleading part of those warranties, it will comply with the Transferee’s
demand so that the Transferee and/or its subsidiaries will obtain full, adequate, timely and
effective compensation.



7.5 The Transferor agrees that each of the above representations and warranties holds harmless
any other terms of the above-mentioned representation and warranties; and the Agreement does
not have any provision which may restrict the scope and applicability of any terms of the
above-mentioned representation and warranties, unless otherwise expressly provided in the
Agreement.



7.6 The Transferor agrees that unless the Transferee signs an expressly and duly authorized
written exemption or discharge document, otherwise (1) the completion of


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 the Transfer of Assets, or (2) any investigation on the Target Assets conducted by the
Transferee itself or via a third party, (3) the discharge (or non-discharge) of the
Agreement by the Transferee, (4) the Transferee has not exercised or delays the exercise of
any rights or has not adopted or delays the adoption of remedial measures, or (5) any other
events or matters (regardless their nature) should not affect the exercise of the relevant
rights and adoption of remedial measures by the Transferee with respect to the Transferor’s
breach of any of those representations and warranties, and the individual or partial
exercise of any rights or remedial measures should not exclude the exercise of further or
other rights or remedial measures. The Transferee’s signing of any written exemption or
discharge document does not constitute the Transferee’s waiver of any other rights, power or
remedial measures.



7.7 The Transferor agrees that after the completion of all arrangements under the Agreement, the
above-mentioned representations and warranties shall continue to be valid.




Article 8 Conditions precedent




8.1 Both parties to the Agreement agree that the conditions precedent of the Transfer of Assets
are: the relevant government regulatory authorities, such as the Ministry of Information
Industry, the Ministry of Commerce and the State-owned Assets Supervision and Administration
Commission of the State Council, approve the transfer of the Target Assets of Guizhou
Subsidiary by agreement and the change to CUCL’s business scope and any other matters related
to the Transfer of Assets.




8.2 After the Agreement is signed, both parties should make their best efforts to cooperate to
satisfy or facilitate the satisfaction of each condition precedent and no party shall carry
out any acts which obstruct or restrict the satisfaction of conditions required by Clause 8.1.




Article 9 Default and compensation



9.1 The Transferor hereby undertakes that it will compensate the Transferee according to the
Transferee’s demand with respect to the following matters and enable the Transferee to obtain
complete, adequate, timely, effective and full compensation any time:



(1) The Transferee has to defend itself from any prosecution, claim, legal
litigation, loss, compensation, payment, costs and expenses (including but not limited
to professional fees and expenses) due to its acceptance of the Target Assets and


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 any matters that had occurred before the Settlement Date, unless otherwise provided
in the Agreement;



(2) From the date of the Agreement to the Settlement Date, in the event that the
Transferor holds the Target Assets, any prosecution, claim, legal litigation, loss,
compensation, payment, costs and expenses (including but not limited to professional
fees and expenses) incurred or suffered as a result of the Transferor’s fault or
mistake;



(3) Any prosecution, claim, legal litigation, loss, compensation, payment, costs
and expenses (including but not limited to professional fees and expenses) incurred or
suffered by the Transferee at any time as a result of any interests, liabilities or
responsibilities of the Transferor or its subsidiaries (other than the Transferee and
its subsidiaries); and



(4) Any prosecution, claim, legal litigation, loss, compensation, payment, costs
and expenses (including but not limited to professional fees and expenses) incurred or
suffered by the Transferee at any time as a result of the breach of any stipulations of
the Agreement (including but not limited to the above-mentioned warranties) by the
Transferor or its subsidiaries (other than the Transferee and its subsidiaries).



9.2 The Transferee hereby undertakes that it shall compensate the Transferor for any actual
losses that the Transferor incurs or suffers as a result of the breach of any stipulations of
the Agreement by the Transferee.



9.3 Any Party to the Agreement who makes a demand for compensation from the other party pursuant
to the Agreement should do so in writing, and should make reasonably detailed explanations of
the facts and situation related to that claim.




Article 10 Force majeure



10.1 When any events that cannot be reasonably controlled by any party occur, or any party cannot
perform or has to postpone the performance of the obligations stipulated by the Agreement due
to the faults and negligence of others, then that party should not be regarded as in breach of
the Agreement, and within the proper and reasonable limitation of the situation, the
performance of the above-mentioned obligations should be terminated.



10.2 When a party cannot perform its obligations under the Agreement due to any force majeure
event, that party should notify the other party in writing within 7 working


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 days after the occurrence of any such force majeure events and both
parties should try to mitigate the damage within reasonable scope.
If a force majeure event occurs, any party shall not be liable to
any damage suffered by the other party, increase in costs or losses
caused by the former’s inability of or delay in contract
performance due to the force majeure event. This kind of inability
or delay in contract performance should not be regarded as breach
of the Agreement. The party declaring inability to perform the
contract due to a force majeure event should adopt appropriate
methods to reduce or eliminate the effects of the force majeure
event, and should make efforts to resume performing the obligations
affected by such force majeure event within the shortest possible
time.




Article 11 Information disclosure and confidentiality



Except for Chinese laws or the laws and Listing Rules of the listing place of CUL or upon the
requests of The Stock Exchange of Hong Kong Limited or any other regulatory authorities, any party
to the Agreement shall not release or allow any person to make an announcement of the matters
related to the Agreement or any ancillary matters of the Agreement without prior written consent of
the other party (the consent concerned shall not be withheld without reasonable ground).




Article 12 Survival



After the completion of the Transfer of Assets, the representation, warranties, agreements and
compensation set out in the Agreement should remain in force.




Article 13 Resolution of disputes



In case of any disputes related to the interpretation or execution of the Agreement, the parties
concerned should make efforts to carry out amicable discussion or conciliation through the
representatives appointed by each party for this purpose in order to resolve the disputes
concerned. If the parties concerned cannot resolve those disputes with the above-mentioned methods
within thirty days after the occurrence of disputes, any party may initiate litigation in a
competent People’s Court.




Article 14 Notification



14.1 Any notification required to be served under the Agreement must be made in writing, and must
be sent to the place set out in Clause 14.3 of the Agreement or sent to the relevant address
or fax number specified by a party to the Agreement to the other party to the Agreement from
time to time.




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14.2 Any of the above-mentioned notification must be served by hand or sent by registered mail or
fax. Any notification which is sent by hand should be regarded as having been received at the
time it is served; if it is sent by registered mail, it is regarded as having been received on
the date of acknowledgement of receipt; if it is sent by fax, it should be regarded as having
been received at the transmission.



14.3 The contact information of the parties of the Agreement is as follows:



China United Telecommunications Corporation Limited




	 	 	 
	Person to be notified:

	 	Chen Pei
	Address:

	 	10/F, No. 133A, Xi Dan Bei Street, Xi Cheng District, Beijing
	Zip:

	 	100032





China Unicom Corporation Limited




	 	 	 
	Person to be notified:

	 	Yang Xiaowei
	Address:

	 	10/F, No. 133A, Xi Dan Bei Street, Xi Cheng District, Beijing
	Zip:

	 	100032






Article 15 Conflict



Should there be any obvious contradiction between any provisions of the other document related to
the Transfer of Assets, the stipulations of the Agreement should be appropriately referred to when
interpreting the provisions of that document as far as permitted by Chinese laws.




Article 16 No assignment



Any party shall not assign, or transfer in other methods, or declare assignment of all or any of
its rights, interests, responsibilities or obligations under the Agreement without the prior
written consent of the other party to the Agreement.




Article 17 Severability



If any one or several provisions under the Agreement is/are void or become(s) illegal or cannot be
enforced in any aspect pursuant to any applicable law, the validity, legality and enforceability of
the remaining provisions contained in the Agreement shall not be affected or harmed in any form.




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Article 18 No waiver



If any party does not exercise, or cannot exercise, or delays in exercising any of its rights,
power or remedial actions under the Agreement or granted by the Agreement, this does not constitute
that party’s waiver of those or any other rights, power or remedial actions.




Article 19 Applicable law



The Agreement is governed by the laws of the People’s Republic of China, and shall be construed and
executed according to the laws of the People’s Republic of China.




Article 20 Language and copy



The Agreement is written in Chinese. There are 6 originals of the Agreement, each party holds 2
originals, the remaining copies are for approval and/or filing by/with the regulatory authority.
Each copy of the above-mentioned Agreement shall have the same legal force.




Article 21 Appendix of the Agreement



21.1 The Appendix of the Agreement is an integral part of the Agreement, and has the same legal
force as the main text of the Agreement, as if it was incorporated into the main text of the
Agreement.



21.2 Amendments of the Appendix of the Agreement or the Appendix of the Agreement may only be made
under written agreement, and signed by the legal representatives or authorized representatives
of each party with company seals affixed, and subject to various approval required by the
incorporating documents of each party.




Article 22 Validity of the Agreement



The Agreement shall take effect after it is signed by the legal representatives or authorized
representatives of each party with company seals affixed.



Both parties to the Agreement have caused their authorized representatives to sign the Agreement on
the date and in the place indicated at the beginning of this Agreement to evidence faith.



(No main text follows and the next page is the page of signatures.)




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(Page of signatures and no main text on this page)



China United Telecommunications Corporation Limited (seal)



((seal and signature))



Legal representative or authorized representative: /s/ Chang Xiaobing

2007.11.16



China Unicom Corporation Limited (seal)



((seal and signature))



Legal representative or authorized representative:/s/ Tong Jilu




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Appendix 1 Introduction of the overall conditions of the Target Assets



In the “Asset Valuation Report on the Intended Transfer of the Relevant Asset and Liability Items
of its Guizhou Subsidiary of China United Telecommunications Corporation Limited” (Zhong Qi Hua Pin
Bao Zi (2007) No. 251) prepared by Beijing China Enterprise Appraisals Company Limited and approved
under Guo Zi Chan Quan [2007] No. 1150 “Reply with the Approval Granted to the Asset Valuation
Results of the Asset and Liability Items of the Telecommunications Business of its Guizhou
Subsidiary by China United Telecommunications Corporation Limited” by State-owned Assets
Supervision and Administration Commission, Beijing China Enterprise conducted a valuation on the
assets and liabilities of the GSM mobile telecommunications business, as well as the assets and
liabilities arising from the business operation of the CDMA mobile telecommunications business of
Guizhou Subsidiary by using the asset approach and income approach at the same time, and it used
the valuation results of the income approach at the end.



The conclusion of valuation by using the asset approach is: on the premise of continuity, as of the
valuation basis date of 31 December 2006, the carrying value of the total assets of the enterprise
amounted to RMB1,852.049 million, the total liabilities amounted to RMB1,427.729 million, the net
assets amounted to RMB424.3199 million (the carrying values had been audited by
PricewaterhouseCoopers Zhong Tian CPAs Limited Company); after adjustments, the carrying value of
the total assets amounted to RMB1,852.049 million, the total liabilities amounted to RMB1,427.729
million, the net assets amounted to RMB424.3199 million; after valuation the total assets amounted
to RMB2,022.2532 million, the total liabilities amounted to RMB1,427.729 million, the net assets
amounted to RMB594.5241 million, the net assets increased value by RMB170.2042, the value increase
rate was 40.11%.




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The summarized conditions of the detailed valuation are as per the table below:




(Unit: RMB 10 Thousand)





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Carrying value	 	 	 	 	 	Value increased or	 	Value increase rate
	Item	 	Carrying value	 	after adjustment	 	Valuation value	 	reduced	 	(%)
	 	 	A	 	B	 	C	 	D=C - B	 	E=(C-B)/B*100%
	Current assets
	 	 	30321.43	 	 	 	30321.43	 	 	 	30716.16	 	 	 	394.73	 	 	 	1.30	 
	Long term investments
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fixed assets
	 	 	145894.37	 	 	 	145894.37	 	 	 	157896.01	 	 	 	12001.64	 	 	 	8.23	 
	Of which: Buildings
	 	 	26297.62	 	 	 	26297.62	 	 	 	34031.89	 	 	 	7734.27	 	 	 	29.41	 
	Machinery & equipment
	 	 	86053.03	 	 	 	86053.03	 	 	 	92466.45	 	 	 	6413.42	 	 	 	7.45	 
	Land
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Work in progress
	 	 	27229.33	 	 	 	27229.33	 	 	 	25973.90	 	 	 	-1255.43	 	 	 	-4.61	 
	Project materials
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Intangible assets
	 	 	944.16	 	 	 	944.16	 	 	 	5262.98	 	 	 	4318.82	 	 	 	457.42	 
	Of which: Land use rights
	 	 	491.68	 	 	 	491.68	 	 	 	4771.40	 	 	 	4279.72	 	 	 	870.42	 
	Other assets
	 	 	8044.93	 	 	 	8044.93	 	 	 	8350.17	 	 	 	305.24	 	 	 	3.79	 
	TOTAL ASSETS
	 	 	185204.90	 	 	 	185204.90	 	 	 	202225.32	 	 	 	17020.42	 	 	 	9.19	 
	Current liabilities
	 	 	52246.31	 	 	 	52246.31	 	 	 	52246.31	 	 	 	0.00	 	 	 	0.00	 
	Long term liabilities
	 	 	90526.59	 	 	 	90526.59	 	 	 	90526.59	 	 	 	0.00	 	 	 	0.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL LIABILITIES
	 	 	142772.90	 	 	 	142772.90	 	 	 	142772.90	 	 	 	0.00	 	 	 	0.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	NET ASSETS
	 	 	42431.99	 	 	 	42431.99	 	 	 	59452.41	 	 	 	17020.42	 	 	 	40.11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





The conclusion of valuation by using the income approach is: the net assets amounted to
RMB661.7081 million, the net assets increased by RMB237.3882 million, the value increase rate was
55.95%.





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