09:53     ASIA COMM HOLD<00104> - Announcement (3)                            

    REASONS FOR THE DISPOSAL                                                  
                                                                              
    The Company is an investment holding company. The core business           
    of its major subsidiaries is watch trading and retailing in the           
    PRC.                                                                      
                                                                              
    Prior to the business restructuring in 1997, DACEL was engaged            
    in the OEM manufacturing of watches and its factory was situated          
    in the Subject Properties. Thereafter, DACEL ceased the OEM               
    manufacturing and has been dormant. None of the members of the            
    Group has taken up the OEM manufacturing after the business               
    restructuring in 1997. In order to maximise the return to the             
    Shareholders, most of the area of the Subject Properties has              
    been leased out to third parties for rental income. Given the             
    revenue generated from the Property Interests only represents             
    an immaterial amount to the Group's total turnover and property           
    investment is not a core business of the Group, the Disposal              
    provides an opportunity to the Group to realise its investment            
    in the Subject Properties and the proceeds thereof could                  
    strengthen the working capital position for the operations of             
    the core business of the Group. As set out in the 2004 interim            
    report of the Company, the Board would consider appropriate               
    settlement proposals regarding the Claim if those are                     
    advantageous to the Group. Since it is stated in the Agreement            
    that the Purchaser shall assume the Claim, the Disposal could             
    also serve as an opportunity for the Group to settle the Claim.           
    Taking into account the above reasons and factors, the Directors          
    believe that the terms of the Disposal are fair and reasonable            
    and in the interests of the Shareholders as a whole.                      
                                                                              
    USE OF PROCEEDS AND FINANCIAL EFFECT OF THE DISPOSAL                      
                                                                              
    The net proceeds from the Disposal after deducting the related            
    expenses are estimated to be approximately HK$15.6 million. The           
    Group intends to apply the net proceeds as its general working            
    capital.                                                                  
                                                                              
    The Group will record a loss of approximately HK$0.2 million              
    on the Disposal, which is calculated with reference to the                
    unaudited net book value of the Property Interests as at 30th             
    September, 2004 and the Claim (which will be written back and             
    recorded as a gain in the accounts of the Group) after deducting          
    the direct costs of approximately HK$2.9 million and the rent             
    free period adjustment of approximately HK$0.4 million.                   
                                                                              
    GENERAL                                                                   
                                                                              
    The Disposal constitutes a discloseable transaction for the               
    Company under the Listing Rules. A circular containing, amongst           
    others, further details of the Disposal will be despatched to             
    the Shareholders as soon as practicable.                                  
                                                                              
    DEFINITIONS                                                               
                                                                              
    In this announcement, the following expressions have the                  
    following meanings, unless the context otherwise specifies:               
                                                                              
    "Agreement"     the sale and purchase agreement entered into on 13th      
    January, 2005 between the Vendor and the Purchaser in relation            
    to the Disposal                                                           
                                                                              
    "Board" the board of Directors                                            
                                                                              
    "Claim" RMB6,374,200 (or approximately HK$6.0 million)                    
    demanded by the PRC JV Partner against the Vendor in relation             
    to certain management fees in previous years for the Property             
    Interests                                                                 
                                                                              
    "Company"       Asia Commercial Holdings Limited, a company