09:58     QUALITY HEALTH<00593> - Announcement (4)                            

    31 January 2005 amounted to approximately HK$56,000. This                 
    historical service charge paid by the Group reflects the actual           
    level of requirement for internal audit and compliance                    
    consultancy services during the period between 2 February 2004            
    and 31 January 2005 and in determining the annual cap, besides            
    taking into account the aforementioned service fees paid by the           
    Group in the period between 2 February 2004 and 31 January 2005,          
    the Directors have also taken into consideration the existing             
    scales of the Group's operations and the anticipated growth of            
    the Group in the next year. In particular, the Directors noted            
    that the audit fees in the general market in Hong Kong are                
    expected to increase in the forthcoming year because of the               
    increasing demand on audit work. Having considered the                    
    aforementioned factors, the aggregate annual amount payable by            
    the Group under the Internal Audit Consultancy Agreement for              
    the twelve-month period ending 31 January 2006 is expected not            
    to exceed HK$250,000 and accordingly, the annual cap for the              
    transactions under the Internal Audit Consultancy Agreement is            
    set at HK$250,000.                                                        
                                                                              
    Reason for the Transaction:     Internal audit and compliance             
    consultancy work is integral to the general administration of             
    the Group, especially bearing in mind the scale of the Group's            
    business operations and the compliance obligations that entail            
    since the securities of the Company are listed on the Stock               
    Exchange. It is essential for the business operations of the              
    Group to be able to handle the internal audit work involved.              
    Taking into account the estimated costs involved and the                  
    prevailing market rates, the Directors consider that it would             
    be in the best interests of the Group to continue to engage SHKCS         
    to provide internal audit and compliance consultancy services             
    to the Group.                                                             
                                                                              
    General                                                                   
                                                                              
    The Group is engaged in the business of healthcare administration,        
    medical scheme administration and the provision of healthcare             
    services. SHK Insurance, Wineur Secretaries and SHKCS are                 
    indirect wholly-owned subsidiaries of SHK, which in turn is               
    indirectly interested in approximately 29.71% of the issued               
    share capital of the Company. SHK Insurance is an insurance               
    broker, Wineur Secretaries is a corporate secretarial service             
    provider and SHKCS is an internal audit and compliance                    
    consultancy service provider.                                             
                                                                              
    Each of the Continuing Connected Transactions involves the                
    provision of services which is carried out on a continuing or             
    recurring basis in the ordinary and usual course of business              
    of the Company and constitutes a continuing connected                     
    transaction under the Listing Rules. As each of the relevant              
    percentage ratios (other than the profit ratio) set out in Rule           
    14.07 of the Listing Rules in respect of the fees payable under           
    each of the Continuing Connected Transaction Agreements is, on            
    an annual basis, less than 2.5% or equal to or more than 2.5%             
    but less than 25% and the annual consideration is less than               
    HK$10,000,000, each of the Continuing Connected Transactions              
    is classified as a continuing connected transaction under Rule            
    14A.34 of the Listing Rules and is exempt from independent                
    shareholders' approval requirements under the Listing Rules.              
                                                                              
    The Company will comply with the requirements under Rule 14A.36           
    of the Listing Rules if the aggregate value of any of the                 
    Continuing Connected Transactions exceeds the relevant annual             
    cap during the twelve-month period ending 31 January 2006, or             
    when the relevant agreement is renewed or where there are                 
    material changes to the terms of the agreement. The Company will          
    also comply with the requirements under Rule 14A.37 to Rule               
    14A.41 of the Listing Rules in relation to the Continuing                 
    Connected