10:28     HON PO GROUP<00228> - Announcement (3)                              

    in maximum.                                                               
                                                                              
    The Placing Agent is not a connected person (as defined under the         
    Listing Rules) of the Company and is independent of and not connected     
    with the Company nor with the directors, chief executive or substantial   
    shareholders of the Company, and any of their subsidiaries or any of      
    their respective associates.                                              
                                                                              
    The Possible Placing                                                      
                                                                              
    The placing of the Convertible Notes in aggregate principal amount of     
    HK$100,000,000 is to be carried out in four tranches. Convertible Notes   
    of up to a maximum of HK$25,000,000 in principal amount is to be issued   
    under each tranche. The first tranche of the Convertible Notes, if and    
    to the extent successfully placed, are to be issued within seven days     
    upon fulfillment of the conditions set out below. The Placing Agent       
    will                                                                      
     receive a placing commission equal to 1% of the gross proceeds of the    
    Convertible Notes placed by it. The placing commission was agreed after   
    arm's length negotiations between the Company and the Placing Agent.      
                                                                              
    Placees                                                                   
                                                                              
    The Placing Agent has agreed to place the Convertible Notes to not less   
    than six placees. Such placees and their ultimate beneficial owners       
    are                                                                       
    to be persons who are not connected person(s) (as defined under the       
    Listing Rules) of the Company and will be independent third parties       
    and                                                                       
    not connected with and not acting in concert with (for the purpose of     
    the Hong Kong Code on Takeovers and Mergers) (i) the Company; (ii) the    
    Company or any of its subsidiaries or (iii) any directors, chief          
    executive or substantial shareholders of the Company or any of its        
    subsidiaries or any of their respective associates (as defined under      
    the                                                                       
     Listing Rules). While the Company will endeavour to ensure that the      
    placees are not parties acting in concert with each other, there is       
    no                                                                        
    assurance, however, as to whether or not some or all of the placees       
    of                                                                        
    the First Convertible Notes and the Convertible Notes are as between      
    themselves persons acting in concert with respect to the Company.         
                                                                              
    Conditions                                                                
                                                                              
    The placing of the Convertible Notes is conditional upon, among other     
    things, the satisfaction of the following conditions:-                    
                                                                              
    (a)   the approval of resolution by the Shareholders at the EGM for       
    approving the increase of authorized share capital of the Company;        
                                                                              
    (b)   the approval of resolution by the Shareholders at the EGM for       
    approving the issuance of the Convertible Notes and the issue and         
    allotment of the Conversion Shares upon conversion of the Convertible     
    Notes; and                                                                
                                                                              
    (c)   the Listing Committee of the Stock Exchange having granted the      
    listing of and permission to deal in the Conversion Shares to be issued   
    upon the exercise of the conversion rights attached to the Convertible    
    Notes.                                                                    
                                                                              
    At the request of the Stock Exchange, the controlling shareholder of      
    the                                                                       
     Company will abstain from voting on the resolution referred to in (b)    
    above and an independent financial adviser will be appointed to advise    
    on the fairness of the Conversion Price in the context of the             
    Convertible Notes issue.                                                  
                                                                              
    If these conditions are not fulfilled on or before 30th June, 2005 or     
    such later date as may be agreed between the Placing Agent and the        
    Company, the Placing Agreement will lapse and become null and void.       
                                                                              
    Completion                                                                
                                                                              
    Completion of the issue of the first tranche of the Convertible Notes     
    (if successfully placed) will take place within seven days following      
    the                                                                       
     date on which the conditions precedent to such issue are fulfilled       
    (or                                                                       
    such other date as the Company and the Placing Agent shall agree).        
                                                                              
    The Convertible Notes                                                     
                                                                              
    The terms of the Convertible Notes have been negotiated on arm's length   
    basis. The principal terms of the Convertible Notes are summarized        
    below:                                                                    
                                                                              
    Issuer                                                                    
                                                                              
    The Company                                                               
                                                                              
    Principal Amount                                                          
                                                                              
    Up to a maximum of HK$100,000,000 in principal amount of Convertible