10:11     NEW SMART<00091> - Announcement (5)                                 

    If any of the conditions set out above shall not have                     
    been fulfilled (or waived) within 90 days after the                       
    signing of the Agreement or such other date as the                        
    parties to the Agreement may agree in writing, the                        
    Agreement and everything herein contained shall,                          
    subject to the liability of any party to the others                       
    in respect of any antecedent breaches of the terms and                    
    conditions herein contained, forthwith lapse                              
    automatically and be null and void and of no further                      
    effect (save and except for clauses concerning                            
    confidentiality, cost and related matters) and in such                    
    event, the Vendor shall refund the Deposit together                       
    with interest accrued thereon within 7 Business Days                      
    after the expiry of the 90-Business Day period as                         
    aforesaid to the Purchaser in accordance with the                         
    Agreement. The Company will also seek appropriate                         
    legal or professional advice in respect of any                            
    possible legal implications, contingent tax or estate                     
    duty liabilities, if any, arising from the relevant                       
    gifting arrangement(s), that is, the transfer of the                      
    Sale Share at a nominal value of US$1 (HK$7.8) from                       
    Mr. Tong to the Vendor with respect to the Sale Share                     
    and pursuant to, among others, the relevant bankruptcy                    
    and estate duty laws and rules in Hong Kong. Further                      
    announcement will be made if the Acquisition is not                       
    completed or if required, any of the conditions waived.                   
                                                                              
    Completion Date                                                           
                                                                              
    Completion is currently expected to be on or about 28                     
    April 2005 or such other date as may be agreed between                    
    the parties due to the additional time that may be                        
    required for the audit, due diligence and other                           
    regulatory requirements concerning the Fernleign                          
    Group.                                                                    
                                                                              
    Funding of the Deposit                                                    
                                                                              
    The Deposit of HK$9,000,000 was funded from the                           
    Group's internal resources.                                               
                                                                              
    THE CONVERTIBLE NOTE                                                      
                                                                              
    At Completion, the Company will issue the Convertible                     
    Note in aggregate principal amount of approximately                       
    HK$11.4 million, subject to downward adjustment to the                    
    balance of the Consideration, to the Vendor in                            
    settlement of balance of the consideration not paid                       
    in cash in the form of the Deposit. Principal terms                       
    of the Convertible Note are summarized below.                             
                                                                              
    Aggregate principal amount                                                
                                                                              
    HK$11.4 million, subject to adjustment as set out                         
    above.                                                                    
                                                                              
    Maturity Date                                                             
                                                                              
    The fifth anniversary of the date of issue of the                         
    Convertible Note. Upon maturity, unless previously                        
    converted or redeemed, 100% of the principal amount                       
    of the Convertible Note together with all interest                        
    accrued thereon shall be repaid by the Company to the                     
    Noteholder.                                                               
                                                                              
    Interest                                                                  
                                                                              
    The Convertible Note will bear interest from the issue                    
    date at the fixed rate of 2.00% per annum (calculated                     
    on a 365-days year) on the principal amount of the                        
    respective Convertible Note outstanding from time to                      
    time. Interest shall be payable annually at the end                       
    of each successive 12-month's interval falling after                      
    the issue date.                                                           
                                                                              
    Conversion                                                                
                                                                              
    The Noteholder will have the right to convert the whole                   
    or any part of the outstanding principal amount of the                    
    Convertible Note into Conversion Shares at the                            
    Conversion Price of HK$0.25 per Conversion Share at                       
    any time until 4:00 p.m. on the date which is the 10th                    
    Business Day preceding the Maturity Date, to the                          
    extent that the exercise of the conversion right does                     
    not trigger mandatory offer obligation under Rule 26                      
    of the Hong Kong Code on Takeovers and Mergers.                           
                                                                              
    The Conversion Price of HK$0.25 per Conversion Share                      
    was determined on an arm's length basis between the                       
    Company and the Vendor. It represents a premium of                        
    about 29% to the closing price of HK$0.194 per Share                      
    as quoted on the Stock Exchange on 15 February 2005                       
    (being the last day of trading in the Shares on the                       
    Stock Exchange prior to the release of this                               
    announcement).