10:12     NEW SMART<00091> - Announcement (6)                                 

    The Conversion Price also represents a premium of                         
    about 28.8% and 29% to the average closing price of                       
    the Shares of HK$0.194 and HK$0.1938 per Share for the                    
    period of 5 and 10 trading days ended on 15 February                      
    2005 respectively.                                                        
                                                                              
    The Conversion Price is subject to adjustment in the                      
    event of consolidation, sub-division, capitalization                      
    of profits or reserves, capital distribution, issue                       
    of new Shares at less than 80% of the then market price                   
    and other dilutive events.                                                
                                                                              
    Conversion Shares                                                         
                                                                              
    Based on the initial Conversion Price of HK$0.25 per                      
    Conversion Share, if the conversion rights attached                       
    to the Convertible Note are fully exercised, 45.6                         
    million Conversion Shares will be issued,                                 
    representing about 7.5% of the existing issued Shares                     
    and about 7% of the issued Shares as enlarged by the                      
    issue of the Conversion Shares.                                           
                                                                              
    The Conversion Shares, when issued, will rank pari                        
    passu with the issued Shares as at the date of the                        
    conversion notice. There is no restriction on the                         
    transfer of the Conversion Shares issued upon the                         
    conversion of the Convertible Notes.                                      
                                                                              
    Voting                                                                    
                                                                              
    None of the Noteholders shall be entitled to attend                       
    or vote at any general meeting of the Company by reason                   
    only of their being a Noteholder.                                         
                                                                              
    Transferability                                                           
                                                                              
    The Convertible Note is not capable of assignment or                      
    transfer without the prior written consent of the                         
    Company and may not be assigned or transferred to any                     
    person who is a connected person of the Company (as                       
    defined under the Listing Rules).                                         
                                                                              
    INFORMATION ON THE COMPANY AND THE GROUP                                  
                                                                              
    The Company is an investment holding company. The                         
    Group is principally engaged in the design and                            
    distribution of "SONIX" brand integrated circuits for                     
    toy manufacturing in Hong Kong and the South East Asia                    
    Region and investment holding in property related                         
    business and other investments.                                           
                                                                              
    For the year ended 31 December 2003, audited consolidated                 
    turnover of the Group amounted to approximately HK$46.2 million           
    and of which, approximately HK$44.3 and HK$1.9 million were               
    attributable to sales of electronic components and property rental        
    respectively.                                                             
                                                                              
    The following is a shareholding structure of the Company                  
                                                                              
    Present                                                                   
                                                                              
    Assume full conversion of the Convertible Note (Note A)                   
    No. of Shares   %   No. of Shares   %                                     
                                                                              
    Mr. Tong and his associates                                               
    - Mr. Tong/Gold Blue Group Limited                                        
    180,000,000   29.5   180,000,000   27.4                                   
    - The Vendor                                                              
    0      45,600,000   7.0                                                   
    Public                                                                    
    430,584,391   70.5   430,584,391   65.6                                   
    Total                                                                     
    610,584,391   100.0   656,184,391   100.0                                 
                                                                              
    (Note A:   this assumption is for illustration purpose                    
    only as pursuant to the Agreement, the Noteholder is                      
    only able to exercise the conversion right on the basis                   
    that such conversion does not trigger any mandatory                       
    offer under Rule 26 of the Takeovers Code. Under the                      
    current circumstance, the Vendor would not be able to                     
    exercise his conversion right.)                                           
                                                                              
    REASONS FOR AND BENEFITS OF THE ACQUISITION                               
                                                                              
    For the years ended 31 December 2002 and 2003, audited                    
    consolidated turnover of the Group was approximately                      
    HK$55.5 million and HK$46.2 million respectively                          
    while net loss attributable to Shareholders was                           
    approximately HK$82.2 million and HK$39.4 million,                        
    respectively. As at 31 December 2002 and 2003, the                        
    Group's audited consolidated net asset was                                
    approximately HK$69.2 million and HK$88.0 million                         
    respectively.