09:38 EASYKNIT INT'L<01218> - Announcement & Resumption (4) terminated at the same time, and the Vendors must return the deposit to the Purchaser without interest. REASONS FOR AND BENEFITS OF THE DISPOSAL The Company and its subsidiaries are principally engaged in the sourcing and export of cotton-based knitted garments for women, children and infants, and property investment. The gross proceeds from disposal of Property 1 and Property 2 will be applied in or toward repayment of the outstanding mortgage of approximately HK$25,000,000 in relation to Property 2 and the balance will be used as general working capital. There is no mortgage outstanding on Property 1. Property 1 and Property 2 are held by the Group for rental purposes under operating leases. In the latest valuation report by Messrs. Knight Frank, a firm of independent professional property valuers, Property 1 and Property 2 were valued at HK$36,000,000 and HK$98,000,000 respectively as at 31 March 2004. The book values of Property 1 and Property 2 were HK$36,000,000 and HK$98,000,000 respectively as at 31 March 2004. The Company will engage an independent valuer to revalue Property 1 and Property 2. The new valuation report will be included in the circular to be despatched to the Shareholders. The gain (before taxation and before the expenses relating to the Disposal) on the Disposal of Property 1 and Property 2 based on their book values as at 31 March 2004 are approximately HK$34,000,000 and HK$52,000,000 respectively. Property 1 and Property 2 are located at a prime business area in Causeway Bay of Hong Kong. Property 1 has saleable area of about 278 square feet and Property 2 has saleable area of about 1,478 square feet. With the recent upturn in Hong Kong's property market, the Directors consider that it is a good opportunity for the Group to dispose of Property 1 and Property 2 with a gain. The Group is currently holding other properties for rental purposes besides Property 1 and Property 2. The Directors consider that the cash flow of the Group will not be adversely affected by the loss of rental income from Property 1 and Property 2 as a result of the Disposal. At the same time, as the mortgage of Property 2 will be repaid after the Disposal, the Group will be able to save the expenses on interest of the mortgage and improve its gearing ratio as a whole. The Directors believe the Disposal will have no adverse affect on the business of the Group. The Directors are of the view that the Disposal is in the interest of the Group and is on normal commercial terms, which are fair and reasonable and in the interest of the Shareholders as a whole. GENERAL At the request of the Company, trading in the Shares on the Stock Exchange was suspended from 9:30 a.m. on 18 February 2005 and on the SGX-ST from 9:00 a.m. on the same date, pending issue of this announcement. Application has been made by the Company to the Stock Exchange and the SGX-ST for the resumption of trading in the Shares on the Stock Exchange and the SGX-ST from 9:30 a.m. and 9:00 a.m. respectively on 23 February 2005. The Disposal constitutes a very substantial disposal for the Company under the Listing Rules, therefore it is subject to the Shareholders' approval under Chapter 14 of the Listing Rules. A circular containing, among other things, details of the Disposal and a notice convening the SGM of the Company will be despatched to the Shareholders as soon as practicable. As at the date of this announcement, the Board comprises Mr. Koon Wing Yee, Mr. Tsang Yiu Kai and Ms. Lui Yuk Chu as executive directors and Mr. Wong Sui Wah, Michael, Mr. Tsui Chun Kong and Mr. Jong Koon Sang as independent non-executive directors. DEFINITIONS The following terms are used in this announcement with the meanings assigned to them below:- `Agent' Centaline Property Agency Limited whose registered office is situated at 5th Floor, Tower 1, New World Tower, 18 Queen's Road Central, Hong Kong `associate' the meaning ascribed thereto in the Listing Rules `Board' the board of Directors `Company' Easyknit International Holdings Limited, an exempted company incorporated in Bermuda with limited liability, the shares of which are listed on the Stock Exchange and the SGX-ST `Director(s)' director(s) of the Company `Disposal' the disposal of Property 1