09:58 DYNAMIC GLOBAL<00231> - Announcement (3) The Directors, including the independent non-executive directors, consider selling HLJ Industry is justified and the total consideration is fair and reasonable having taken into account the following factors (i) the unaudited net assets value of RMB8.1 million (approximately HK$7.6 million) of HLJ Industry as accounted in the book of the Group as at 30 June 2004; (ii) the business prospects of HLJ Industry; (iii) total liabilities of RMB32 million (approximately HK$30.3 million) of HLJ Industry as at 30 June 2004; and (iv) the net effect on the financial position of the Company should the Company write off the entire amount of the shareholder loan (RMB9.38 million) granted to HLJ Industry. Other Conditions Under the 2005 Agreement, the Company shall, subject to the consent of the 2005 Purchaser, appoint an independent valuer within 30 days from the date of the 2005 Agreement to evaluate the Sale Shares by 31 March 2005. Should the net asset value of HLJ Industry exceed RMB10 million (approximately HK$9.44 million), the 2005 Purchaser shall compensate the Company by paying to the Company an amount equivalent to the excess. A professional asset valuer and a CPA firm, both are independent third parties, have been appointed subsequent to the signing of the 2005 Agreement. As at the date of this announcement, a valuation report on the underlying land and property of HLJ Industry as of 17 March 2005 and an auditors' report together with the financial statements of HLJ Industry for the year ended 31 December 2004 ("HLJ Audited Accounts") have been submitted to the 2005 Purchaser. A conclusion has then been drawn that HLJ Industry was in a net liability position. As a result, neither compensation nor additional consideration will be paid by the 2005 Purchaser to the Company. Furthermore, the 2005 Disposal is conditional upon full compliance of the Listing Rules by the Company, failing which the 2005 Agreement will become null and void. Information on HLJ Industry HLJ Industry is a company incorporated in the PRC and principally engaged in the operation of a skiing resort at Yabuli, Heilongjiang. Its assets consist of certain land, building and fixed assets, which were included in the consolidated balance sheet of the Group. A judgement was made by the Court on 22 March 2000 against the Company and DGDL in relation to a claim of approximately RMB11.6 million (approximately HK$10.9 million) made by a former landlord of the Group in respect of an alleged breach of a tenancy agreement signed by HLJ Real Estate. The Company's interests in HLJ Industry had been frozen by the Court since March 2001 and all the employees of HLJ Industry left their employment in early 2002. The operation of the ski resort was therefore suspended since then. On 30 March 2001, an order was made by the Court that DGDL's existing 100% interest in HLJ Industry be frozen as security for the repayment of the claim and this restriction has been imposed upon the Group thereby affecting the intended disposal of its interest in HLJ Industry as announced in the Company's announcement dated 10 September 2002. On 1 August 2003, the Company reached an agreement for settling the judgement with the Court to release the Ski Assets by paying a penalty amount of RMB9.0 million (approximately HK$8.5 million). On 10 September 2003, the penalty was paid and the Company obtained a release of the Ski Assets from the Court. The operation was expected to be restated by joint efforts by the Company and the 2003 Purchaser. However, due to financial difficulties of the 2003 Purchaser, the operation has never been normally restated as of the date of this announcement.