09:52     HK CATERING MGT<00668> - Announcement (3)                           

    Agreement and is payable in the following manners:                        
                                                                              
    (i)     HK$500,000 to be deducted from the balance of                     
    the Consideration upon Completion;                                        
                                                                              
    (ii)    HK$250,000 to be secured by bank guarantee given                  
    in favour of the Purchaser upon Completion. The Group                     
    is in the process of arranging a bank guarantee which                     
    will be given under a bank facility maintained by the                     
    Group with the bank.                                                      
                                                                              
    Further details about the bank guarantee (including                       
    when the bank guarantee will be released) and when                        
    and how the monthly rental will be paid will be                           
    contained in the circular to be despatched to                             
    shareholders.                                                             
                                                                              
    The Directors consider the rental fee to be fair and                      
    reasonable and is comparable to the current market                        
    price in the same region as the Property in the last                      
    two weeks prior to the date of the Provisional                            
    Agreement.                                                                
                                                                              
    As the annual rental expense of HK$3 million payable                      
    under the Tenancy Agreement exceeds 5% of HKCM's                          
    consolidated profit before taxation and minority                          
    interests for the year ended 31 March 2004, the                           
    leasing of the Property constitutes a discloseable                        
    transaction of HKCM under the Listing Rules. Further                      
    details relating to the Tenancy Agreement will be                         
    contained in the circular to be despatched to                             
    shareholders.                                                             
                                                                              
    INFORMATION ABOUT THE VENDOR                                              
                                                                              
    SUL is a property holding company incorporated in Hong                    
    Kong with limited liability and whose entire issued                       
    share capital is beneficially owned by HKCM.                              
                                                                              
    INFORMATION OF THE GROUP                                                  
                                                                              
    The Group is principally engaged in the operation of                      
    restaurants and bakeries and property investments.                        
                                                                              
    REASONS FOR THE DISPOSAL                                                  
                                                                              
    The Directors considers that it is justified for the                      
    Group to implement the Disposal. Given the recent                         
    market boom in property sales, the Disposal provides                      
    a capital gain to the Group. The Directors notice that                    
    the rental fee payable by the Group for the leasing                       
    of the Property from the Purchaser is HK$3 million                        
    per annum, which is fair and reasonable as compared                       
    to other rental fees in the same region of where the                      
    Property is located. The term of the Tenancy Agreement                    
    will only be fixed for a term of one year (with an                        
    option to renew for a further one year by the Group),                     
    thereby giving the Group flexibility in relocating                        
    its restaurant business to other areas or                                 
    implementing other business plans. The Board of HKCM                      
    believes that the Consideration is fair and                               
    reasonable and the Disposal of the Property is in the                     
    best interests of HKCM and its shareholders as a whole.                   
    The Provisional Agreement contains normal commercial                      
    terms and the Consideration was arrived at on arm's                       
    length basis.                                                             
                                                                              
    As the Consideration exceeds 5% of HKCM's                                 
    consolidated total assets as set out in the interim                       
    report for the 6 months ended 30 September 2004                           
    (adjusted by deducting payment of interim dividend                        
    for the amount of HK$16.4 million in January 2005),                       
    the Disposal constitutes a discloseable transaction                       
    of HKCM under the Listing Rules. A