10:58 HSIN CHONG CONS<00404> & SYNERGIS HOLD<02340> - J. Ann. (2) TENANCY AGREEMENT III DATED 1ST APRIL, 2005 Landlord : Deventer Tenant : Summit Premises : A portion of Hsin Chong Center, 107!V109 Wai Yip Street, Kwun Tong, Kowloon, Hong Kong, totaling 4,639 square feet of gross floor area Term : From 1st April, 2005 to 31st March, 2008 (both days inclusive) Monthly Rental : HK$34,514.16 exclusive of management fee, air-conditioning fee and other outgoings, fixed over the term of the Tenancy Agreement III Payment Terms : Monthly rent will be payable by cash on the first day of each calendar month Deposit Received : HK$103,356.92 REASON FOR ENTERING INTO TENANCY AGREEMENT I, II and III BY DEVENTER Hsin Chong Center was acquired by Deventer in 1997 for renovation into an industrial/office building. Upon completion of the renovation in March, 1999, HCCG, Synergis, HCH, Summit and their respective groups of companies relocated their headquarters to Hsin Chong Center. In 1999, HCH as the tenant entered into the master tenancy agreement for its subsidiaries (including SMS and Summit) with Deventer as the landlord, the term of which expired on 31st March, 2005. For the sake of flexibility in managing the term of particular tenant, Deventer entered into respective tenancy agreements with SMS, Summit and HCH (for other subsidiaries under HCH) on 1st April, 2005. The rental rates were agreed to after arm's length negotiations upon normal commercial terms and with reference to the prevailing market rates. The rental rates were also comparable to rates offered by Deventer to other tenants of Hsin Chong Center which were not connected persons under the Listing Rules. The tenancies will generate stable and recurrent rental incomes as long-term investment for HCCG. The Directors of HCCG, including the independent non-executive directors, are of the opinion that the terms of the Tenancy Agreement I, II and III are fair and reasonable and in the interests of HCCG and its shareholders as a whole. REASON FOR ENTERING INTO TENANCY AGREEMENT I BY SMS SMS relocated its headquarters to Hsin Chong Center in 1999. The tenancy was covered by the master tenancy agreement entered into by HCH as the tenant for its subsidiaries including SMS with Deventer as the landlord, the term of which expired on 31st March, 2005. To distinguish its legal obligations under the tenancy agreement, SMS entered into a sub-lease agreement with HCH on 18th September, 2003 for a period of twenty months from 1st August, 2003 to 31st March, 2005. Particulars of the sub-lease agreement had been disclosed in the Prospectus dated 29th September, 2003 and the Annual Report 2003/2004 of Synergis. To further distinguish its legal obligations with the landlord directly, SMS as the tenant entered into the Tenancy Agreement I with Deventer as the landlord for the period from 1st April, 2005 to 31st March, 2008. The premises are used by SMS for office and car parking purposes. Apart from the Tenancy Agreement I, SMS entered into a licence agreement with Deventer on 1st February, 2004 for use of a function room in Hsin Chong Center for call center purpose with an annual licence fee of HK$136,200 for the period from 1st December, 2003 to 30th November, 2005. The Tenancy Agreement I is concluded after due negotiations on arm's length basis upon normal commercial terms and with reference to the prevailing market rates. The Directors of Synergis, including the independent non-executive directors, are of the opinion that the terms of the Tenancy Agreement I are fair and reasonable and in the interests of Synergis and its shareholders as a whole. BUSINESS OF HCCG HCCG is an investment holding company. The principal activities of its subsidiaries are building construction and civil engineering, electrical and mechanical engineering, construction management, property rental and development. BUSINESS OF SYNERGIS Synergis is an investment holding company. The principal activities of its subsidiaries are provision of property management and facility management services, security services, cleaning services, laundry services, repair and maintenance works and trading of related products. DEFINITIONS In this announcement, the following expressions have the following meanings, unless context otherwise require: "Deventer" Deventer Limited, a wholly-owned subsidiary of HCCG. Deventer is a property holding company