09:58     EGANA JEWELLERY<00926> - Announcement (1)                           

    The Stock Exchange of Hong Kong Limited takes no responsibility for       
    the contents of this announcement, makes no representation as to its      
    accuracy or completeness and expressly disclaims any liability            
    whatsoever for any loss howsoever arising from or in reliance upon        
    the whole or any part of the contents of this announcement.               
                                                                              
    EGANA JEWELLERY & PEARLS LIMITED                                          
    (Incorporated in the Cayman Islands with limited liability)               
    (Stock Code: 926)                                                         
                                                                              
    CONTINUING CONNECTED TRANSACTIONS                                         
                                                                              
                                                                              
     SUMMARY                                                                  
     The Company is the jewellery division of                                 
    EganaGoldpfeil and was separately listed on the Stock Exchange on 27      
    July 1998 to engage in the design, manufacturing, distribution and        
    trading of jewellery and licensing. EganaGoldpfeil Group currently        
    owns approximately 60% in the issued share capital of the Company and     
    is a connected person of the Company under the Listing Rules.             
                                                                              
    The Continuing Connected Transactions have been conducted since the       
    separate listing of the Company in July 1998. On 31 October 2001, the     
    Stock Exchange granted a waiver to the Company from strict compliance     
    with the announcement and/or independent Shareholders' approval           
    requirements in respect of the Continuing Connected Transactions          
    under Chapter 14 of the Old Listing Rules. The waiver expired on 31       
    December 2003.                                                            
                                                                              
    Upon expiry of the waiver, each of these transactions constitute a        
    Continuing Connected Transaction under Rule 14A.34 of the Listing         
    Rules. Details of the transactions have been included in the              
    Company's published annual report and accounts for the year ended 31      
    May 2004 under Rule 14A.45 of the Listing Rules.                          
                                                                              
                                                                              
    BACKGROUND                                                                
    The Company is the jewellery division of EganaGoldpfeil and was           
    separately listed on the Stock Exchange on 27 July 1998. The Group is     
    principally engaged in the design, manufacture, distribution and          
    trading of jewellery worldwide and licensing.                             
                                                                              
    EganaGoldpfeil is principally engaged in the design, assembly,            
    manufacturing and distribution of timepiece, jewellery and leather        
    products. It currently owns approximately 60% of the issued share         
    capital of the Company and is a connected person of the Company for       
    the purpose of the Listing Rules.                                         
                                                                              
    Prior to the listing of the Company, the Company has from time to         
    time conducted the Continuing Connected Transactions with                 
    EganaGoldpfeil Group. To enhance cost and management efficiency for       
    the benefit of the Group and EganaGoldpfeil Group, EganaGoldpfeil         
    Group has been providing certain management, administrative and           
    support services to the Group and licensing certain brand names owned     
    by EganaGoldpfeil Group to the Group. These transactions have been        
    carried out in accordance with the Management Service Agreement and       
    the Trademark License and Assignment Agreement. In addition, there        
    exist certain trading transactions between the Group and                  
    EganaGoldpfeil Group. All these transactions are on normal commercial     
    terms and are in the ordinary and usual course of business. These         
    transactions constituted as Continuing Connected Transactions under       
    Chapter 14A of the Listing Rules.                                         
                                                                              
    MANAGEMENT SERVICE AGREEMENT                                              
    EganaGoldpfeil Group has been providing certain management,               
    administrative and support services to the Group under the Management     
    Service Agreement. The services were provided on normal commercial        
    terms and the charges were based on a cost plus basis.                    
                                                                              
    The Stock Exchange has previously granted a waiver to the Company         
    from strict compliance with the connected transaction requirements        
    under Chapter 14 of the Old Listing Rules in connection with these        
    transactions for three years ended on 31 December 2003. Under the         
    waiver, the cap amount of the aggregate value of such transaction for     
    each financial year should not exceed 5% of the Group's audited total     
    annual expenses in that year.                                             
                                                                              
    For the 17 months ended 31 May 2002 and the financial year ended 31       
    May 2003, the aggregate value of the transaction amounted to              
    approximately HK$11,477,000 and HK$10,852,000, representing               
    approximately 3.1% and 4.0% of the Group's audited total annual           
    expenses in the relevant period/year respectively. For the 7 months       
    ended 31 December 2003, the aggregate value of such transaction was       
    approximately HK$6,341,000, representing approximately 1.9% of the        
    Group's audited total annual expenses for the financial year ended 31     
    May 2004. The Company has complied with the waiver granted by the         
    Stock Exchange.                                                           
                                                                              
    For the period from 1 January 2004 to 31 May 2004, the aggregate          
    value of the Management Service Agreement was approximately               
    HK$3,893,000 (for the periods from 1 January 2004 to 31 March 2004