09:51     HK CATERING MGT<00668> - Announcement (2)                           

    The consideration for the Disposal is HK$39,000,000                       
    and will be payable in cash in the following manners:                     
                                                                              
    1.      an initial deposit of HK$1,500,000 has been paid                  
    by the Purchaser to the Vendor upon the signing of                        
    the Provisional Agreement;                                                
                                                                              
    2.      a further deposit in the sum of HK$2,400,000 will                 
    be paid upon signing of the formal agreement for sale                     
    and purchase which is proposed to take place on or                        
    before 21 March 2005; and                                                 
                                                                              
    3.      the balance of the cash consideration in the sum                  
    of HK$35,100,000 will be paid upon Completion of the                      
    Disposal.                                                                 
                                                                              
    The Consideration was arrived at by the parties                           
    through arm's length negotiation between the Vendor                       
    and the Purchaser with reference to the current market                    
    price of the properties in the same area of the                           
    Property within the six months prior to the date of                       
    the Provisional Agreement. The Directors of HKCM                          
    consider the Consideration to be fair and reasonable                      
    and in the best interests of HKCM. Even though the                        
    Directors did not get any advice relating to the                          
    current market price, the Directors were informed by                      
    the property agent (who is an independent third party                     
    not connected with the Group) through whom the                            
    transaction was completed that the Consideration                          
    represents the current market price in the area which                     
    the Property is located. The Directors believe that                       
    the Consideration is comparable to the current market                     
    price in the area.                                                        
                                                                              
    The net profit attributable to the Property (before                       
    tax and extraordinary items) which is the subject of                      
    the transaction for the two financial years ended 31                      
    March 2004 and 31 March 2003 are HK$201,885 and                           
    HK$1,146,605 respectively. The net book value of the                      
    Property is HK$28,428,593 as at 30 September 2004.                        
    No independent valuation of the Property has been made                    
    by the Group. The capital gain arises from the                            
    Disposal is approximately HK$10 million, which is                         
    calculated by deducting the expected net book value                       
    of the Property upon Completion from the                                  
    Consideration of the Property less all miscellaneous                      
    expenses relating to the Disposal. The Property was                       
    acquired by SUL back in 1997 at a price of HK$55 million.                 
    The net proceeds of the Disposal will be used as                          
    general working capital of the Group.                                     
                                                                              
    Completion                                                                
                                                                              
    Subject to the provisions contained in the                                
    Provisional Agreement, Completion shall take place                        
    on or before 20 May 2005 whereby the Property will                        
    be assigned from the Vendor to the Purchaser.                             
                                                                              
    Tenancy Agreement                                                         
                                                                              
    Upon Completion, the Property will continue to be used                    
    by the Group for its restaurant business. The                             
    Purchaser will enter into a Tenancy Agreement with                        
    the Group whereby the Purchaser as landlord will lease                    
    the Property to the Group as tenant for a term of one                     
    year commencing from the date of Completion at a                          
    rental fee of HK$250,000 per month (exclusive of                          
    management fees and rates), with an option to renew                       
    for one additional year by the Group upon the expiry                      
    of the one year period, at the same rental fee. A                         
    deposit for the amount of HK$750,000 (equivalent to                       
    three months rental fee) has to be paid by the Group                      
    to the Purchaser under the Tenancy