09:49     GOME<00493> - Announcement (3)                                      

    35%                                                                       
                                                                              
    the Parent Group                                                          
                                                                              
    In order to enhance the operational efficiency of the Group and the       
    Parent Group, it is proposed under the Master Purchase Agreement and the  
    Master Supply Agreement that the respective members of the Group and the  
    Parent Group will make bulk purchases of the Products with some of their  
    mutual suppliers. Such members will from time to time sell part of the    
    purchased Products to members of the other group as principals on an      
    at-cost basis. Under such arrangement, procurement of the Products by     
    the Group and the Parent Group from certain suppliers can be better       
    co-ordinated and transacted in a more efficient manner. Without such      
    arrangement, transportation costs of the Products for the Group and the   
    Parent Group may increase particularly in cases where door-to-door        
    delivery by the suppliers is not available or can only be obtained at a   
    higher cost. In view of the reciprocal arrangement under the Master       
    Supply Agreement and the Master Purchase Agreement, the Directors are of  
    the view that the Continuing Connected Transactions contemplated          
    thereunder are on normal commercial terms.                                
                                                                              
    REQUIREMENTS UNDER THE LISTING RULES                                      
                                                                              
    GOME Appliance is a subsidiary of the Company. Beijing GOME is a member   
    of the Parent Group. The Parent Group is owned by Mr. Wong who is a       
    substantial shareholder of the Company holding, together with his         
    associates, an approximately 65.55% interest in the Company.              
    Accordingly, the transactions contemplated under the Master Purchase      
    Agreement and the Master Supply Agreement will constitute continuing      
    connected transactions for the Company under the Listing Rules.           
                                                                              
    The Continuing Connected Transactions are subject to reporting and        
    announcement requirements under Rules 14A.45 to 14A.47 of the Listing     
    Rules and the independent shareholders' approval requirements under       
    14A.48 of the Listing Rules.                                              
                                                                              
    The amounts of the Proposed Caps for the transactions under the Master    
    Purchase Agreement and the Master Supply Agreement are determined based   
    on arm's length negotiations between the parties with reference to,       
    among others, the current expansion plan of the Group.                    
                                                                              
    The Directors are of the view that so far as the Independent              
    Shareholders are concerned, the Continuing Connected Transactions and     
    the terms thereof have been negotiated on an arm's length basis and on    
    normal commercial terms between the parties and are fair and reasonable   
    and in the interest of the Group and the shareholders of the Company as   
    a whole.                                                                  
                                                                              
    The Company will seek the approval by the Independent Shareholders of     
    the Master Purchase Agreement, the Master Supply Agreement and the        
    Proposed Caps in relation to the Continuing Connected Transactions on     
    the following conditions:                                                 
                                                                              
    (a)        (1)        The cap amounts of the transactions under the       
    Master Purchase Agreement for each of the three financial years ending    
    31 December 2007 will not exceed HK$400 million, HK$500 million and       
    HK$550 million respectively.                                              
                                                                              
            (2)        The cap amounts of the transactions under the Master   
    Supply Agreement for each of the three financial years ending 31          
    December 2007 will not exceed HK$400 million, HK$500 million and HK$550   
    million respectively.                                                     
                                                                              
    (b)        The Continuing Connected Transactions will be:                 
                                                                              
            (i)        entered into in the usual and ordinary course of       
    businesses of the Group;                                                  
                                                                              
            (ii)        entered into in accordance with the terms of the      
    Master Purchase Agreement or the Master Supply Agreement (as the case     
    may be); and                                                              
                                                                              
            (iii)        conducted on normal commercial terms or on terms     
    that are no less favourable than terms available to or from independent   
    third parties.                                                            
                                                                              
    (c)        Brief details of the Continuing Connected Transactions will    
    be disclosed in the Company's next and each successive annual report      
    together with a statement of opinion of the independent non-executive     
    Directors in such manner as referred to in paragraph (d) below in         
    accordance with Rule 14A.45 of the Listing Rules.                         
                                                                              
    (d)        In compliance with Rule 14A.37 of the Listing Rules, the       
    independent non-executive Directors will review annually the Continuing   
    Connected Transactions, and confirm in the Company's annual report and