09:34     SMI CORP<00198> - Announcement (1)                                  

    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.                                                     
                                                                              
                                                                              
    SMI CORPORATION LIMITED                                                   
    (Incorporated in Bermuda with limited liability)                          
    Stock code: 198                                                           
                                                                              
    DISCLOSEABLE TRANSACTION                                                  
                                                                              
    DISPOSAL OF 35% INTEREST IN ALFAWAY INTERNATIONAL                         
    LIMITED                                                                   
    TOGETHER WITH LOANS DUE AND OWING BY IT                                   
                                                                              
    The Company wishes to announce an Agreement was made                      
    between Stepwise, a wholly-owned subsidiary of the                        
    Company, and Alfresco on 1 February 2005 but became                       
    effective on 2 February 2005 upon receipt of the 1st                      
    instalment of the consideration by Stepwise. The                          
    Agreement is for the disposal of the Sale Shares and                      
    the Sale Loans for an aggregate consideration of HK$48                    
    million.                                                                  
                                                                              
    The Disposal contemplated under the Agreement                             
    constitutes a disclosable transaction of the Company                      
    under the Listing Rules. A circular containing further                    
    details of the Disposal will be dispatched to                             
    Shareholders as soon as practicable.                                      
                                                                              
    1.   INTRODUCTION                                                         
                                                                              
    1.1 The Disposal                                                          
                                                                              
    Stepwise owns 35% of the issued share capital in                          
    Alfaway and Alfresco owns the remaining 65%. The                          
    Disposal involves the disposal to Alfresco of the Sale                    
    Shares (that is, 35% of the issued share capital of                       
    Alfaway) and the Sale Loans (amounting to about HK$22                     
    million in aggregate due and owing by Alfaway to                          
    Stepwise) for an aggregate consideration of HK$48                         
    million, of which HK$30 million is the consideration                      
    for the Sale Shares and HK$18 million is the                              
    consideration for the Sale Loans. The principal terms                     
    of the Agreement are set out in paragraph 2 below.                        
                                                                              
    1.2 The Sale Loans                                                        
                                                                              
    The Sale Loans (an aggregate amount of approximately                      
    HK$22 million (inclusive of interest) as at 31                            
    December 2004) consist of four loans due and owing by                     
    Alfaway to Stepwise, as follows:                                          
                                                                              
    (i)   The sum of HK$5,652,055 being the balance due                       
    under a promissory note due to be repaid on 30 June                       
    2003 bearing interest at the rate of 15% per annum;                       
                                                                              
    (ii)   The sum of HK$7,756,216 being the balance due                      
    under a promissory note due to be repaid on 30 June                       
    2003 bearing interest at the rate of 15% per annum;                       
                                                                              
    (iii)   The sum of HK$6,707,546 advanced to Alfaway                       
    due to be repaid on 30 June 2003 bearing interest at                      
    the rate of 12% per annum; and                                            
                                                                              
    (iv)   The sum of HK$2,023,608 being the balance due                      
    under a loan agreement repayable by instalments of                        
    RMB300,000 (HK$283,018.87) every month until full                         
    repayment bearing interest at 8% per annum.                               
                                                                              
    The Company will receive the consideration for the                        
    Sale Loans in the manner as described under "Payment                      
    Terms" in paragraph 2(5) below. None of the Sale Loans                    
    will be repaid before completion of the Agreement.                        
                                                                              
    2.   THE AGREEMENT                                                        
                                                                              
    (1)   Date:   1 February 2005 but takes effect on                         
    payment of the 1st instalment referred to below, which                    
    sum Stepwise received on 2 February 2005.                                 
                                                                              
    (2) Parties                                                               
    Vendor:   Stepwise, a wholly-owned subsidiary of the                      
    Company, the legal and beneficial owner of 35% of the                     
    issued share capital in Alfaway                                           
                                                                              
    Purchaser:   Alfresco, the legal and beneficial owner                     
    of the other 65% of the issued share capital in Alfaway