09:24     ASIA ALLIANCE<00616>-Announcement & Resumption of Trading(2)        

    Assets to be Acquired                                                     
    Pursuant to the Agreement and the Supplemental Agreement, the             
    Subsidiary has agreed to acquire the Property, comprising the land        
    use rights for 50 years for land of about 670 hectares situate at the     
    West of Dongliang Road, Zhili Town, Huzhou, PRC and the South of          
    Hengtang Harbour, PRC from the Vendor. 70 hectares of land comprised      
    in the Property has been reserved but will only be delivered upon         
    demand by the Subsidiary at no extra cost. It is intended that            
    multifunctional manufacturing facilities will be built on the             
    Property to expand the manufacturing capacity of the Group.               
                                                                              
    The Agreement and the Supplemental Agreement also provide that the        
    waste water treatment plant will be built on the Property.                
                                                                              
    Consideration                                                             
    Under the Agreement and the Supplemental Agreement, the Property          
    Consideration is RMB10,050,000 (equivalent to approximately               
    HK$9,472,196), which has been determined at arm's length negotiation      
    with reference to (i) the value of the Property as approved by the        
    People's Government of Huzhou City as an incentive for the Group to       
    invest in the Huzhou City and to build its facilities in that city        
    which will bring follow on employment and growth and (ii) the             
    expenses for the issue of the certificate of land use right and           
    related tax to be borne by the Vendor (the tax for the acquisition of     
    the Property of 3% of the Property Consideration will be payable by       
    the Subsidiary, the Vendor will coordinate the refund to the              
    Subsidiary of 80% of the tax paid, which will involve approval(s) by      
    relevant government authority).                                           
                                                                              
    In addition, the Agreement and the Supplemental Agreement provide         
    that the Plant shall be constructed at a cost of not more than            
    HK$30,000,000 and the Deposit of HK$15,000,000 shall be paid and will     
    be applied for the purpose of construction of the Plant.                  
                                                                              
    The Directors believe that the terms of the Transaction are fair          
    and reasonable and in the interests of the shareholders of the            
    Company as a whole.                                                       
                                                                              
    The Property Consideration of RMB10,050,000 (equivalent to                
    approximately HK$9,472,196) and related expenses of approximately         
    HK$527,804 and the Deposit of HK$15,000,000 are payable within 10         
    days from the signing of the Agreement. If the condition precedent is     
    not satisfied, the above sums of HK$25,000,000 in total will be           
    refundable.                                                               
                                                                              
    The Company will inject further funds through the PRC Entities as         
    and when necessary for the purpose of development of the Project. The     
    Agreement and the Supplemental Agreement do not provide for any           
    further commitment of funds other than stating that the total             
    registered capital of the PRC Entities shall be HK$500,000,000 in         
    total which shall be injected as required.                                
                                                                              
    The Group will finance the Acquisition and the Construction through       
    bank borrowings of HK$30,000,000 which is guaranteed by a personal        
    guarantee from Mr. Koon Wing Yee, a director of the Company. The          
    Company has not granted any security to Mr. Koon in connection with       
    the finance arrangements. The Group will also make use of an existing     
    bank facility of HK$10,000,000 for the Construction if required.          
                                                                              
    Condition Precedent                                                       
    The Agreement and the Supplemental Agreement will be binding on the       
    Subsidiary upon the Company and the Subsidiary having obtained all        
    necessary approvals, if any, in respect of the transaction                
    contemplated under the Agreement and the Supplemental Agreement and       
    pursuant to the Listing Rules, including without limitations              
    obtaining shareholders' approval of the Company.                          
                                                                              
    Completion                                                                
    The Property shall be capable of being transferred to the Subsidiary      
    or its subsidiaries within 15 business days of payment of the             
    Property Consideration. The Vendor will also arrange for                  
    infrastructure connections including water, electricity, roads, gas       
    and others within 45 business days of the Group obtaining relevant        
    approvals.                                                                
                                                                              
    The construction of the Plant shall be completed before March             
    2006.                                                                     
                                                                              
    The Agreement and the Supplemental Agreement further provide for          
    indicative timetable for the completion of other parts of the             
    manufacturing operations as follows:                                      
                                                                              
    (i)   construction including the Plant must commence in early 2005;       
                                                                              
    (ii)  strive to complete garment manufacturing and bleaching and dyeing   
    capabilities by early 2006; and                                           
                                                                              
    (iii) strive to complete knitting operation by the end of 2006.           
                                                                              
    Other Terms                                                               
    Additional terms include in summary the following:                        
                                                                              
    (1) The Subsidiary may nominate any of its subsidiaries or affiliates to