10:31     HON PO GROUP<00228> - Announcement (8)                              

             Date of    Intended                                              
             general    use of                                                
       Announcement       mandates    proceeds    Actual use                  
    Description   date   Net proceeds   granted   as announced   of           
    proceeds                                                                  
                                                                              
                                                                              
    Issue of 126,000,000    20th January,    About   27th May,    General     
    working    Used as                                                        
      new Pre-Consolidation    2005   HK$7.6 million   2004   capital         
    intended                                                                  
      Shares pursuant to                                                      
      a vendor placing                                                        
      exercise at                                                             
      HK$0.0624 per                                                           
      share                                                                   
                                                                              
    First Convertible Notes    21st February,    About   Not yet   General    
    working   Not applicable                                                  
      to be issued (Note)   2005   HK$39.4 million   granted   capital        
                                                                              
    Note:   The First Convertible Notes are not yet issued. Please refer      
    to                                                                        
    section (2) "Update On Possible Placing Of First Convertible Notes"       
    below.                                                                    
                                                                              
    Shareholders should note that the issue of the Convertible Notes is       
    conditional upon the fulfillment of the Conditions as described under     
    "Conditions" in section (1) above. Shareholders and potential investors   
    should exercise caution when dealing in the Shares.                       
                                                                              
    (2)   UPDATE ON POSSIBLE PLACING OF FIRST CONVERTIBLE NOTES               
                                                                              
    At the request of the Stock Exchange, the Company will put the placing    
    of First Convertible Note before the Shareholders with the controlling    
    shareholder of the Company abstaining from voting on the relevant         
    resolution and will appoint an independent financial adviser to advise    
    on the fairness of the conversion price of the First Convertible Notes    
    in the context of that proposed issue. The reasons for and the benefit    
    of the proposed issue of the First Convertible Note have been disclosed   
    in the Company's announcement dated 21st February, 2005 and               
    shareholders                                                              
     circular dated 21st March, 2005. The low initial conversion price of     
    the First Convertible Note of HK$0.1 per Share after adjustment for       
    the                                                                       
    Share Consolidation (which represented about 69.70% discount to the       
    last                                                                      
     closing price per Pre-Consolidation Share prior to the announcement      
    of                                                                        
    that issue) has been agreed by the Company after taking into account      
    substantially the same factors as those set out under "The Convertible    
    Notes - Conversion Price" in section (1) above. The Directors consider,   
    having regard to such factors, the opportunity to raise funds for         
    working capital purposes through the issue of the First Convertible       
    Notes (which has not in the past been available to the Company and may    
    not in the future be replicated as that is dictated largely by the        
    condition of the equity market and the market for the Shares) and this    
    being the conversion price at which the Placing Agent was then prepared   
    to undertake placing of the Company's convertible notes, the conversion   
    price for the First Convertible Notes to be fair and reasonable. Having   
    regard to the net liabilities and net losses reported by the Company,     
    a                                                                         
    new Shares issue would be unrealistic and would in any event result       
    in                                                                        
    more immediate dilution to Shareholders.                                  
                                                                              
    In order to allow time to issue a further circular to Shareholders        
    containing, amongst other things, the advice of an independent            
    financial                                                                 
     adviser and the recommendations of the independent board committee       
    of                                                                        
    the Company in respect of the placing of the First Convertible Notes,     
    the Company and the Placing Agent on 27th April, 2005 agreed to extend    
    the long stop date by which the conditions precedent for the issue of     
    the First Convertible Notes are to be fulfilled from 6th May, 2005 to     
    30th June, 2005. A notice to reconvene the extraordinary general meeting  
     of the Company adjourned on 8th April, 2005 will be issued after         
    finalisation of the circular.                                             
                                                                              
    (3)   PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL                       
                                                                              
    As at the date of this announcement, the authorised share capital of      
    the                                                                       
     Company is HK$100,000,000 divided into 2,000,000,000 Shares. In order    
    to accommodate future expansion and growth of the Group, the Directors    
    propose to increase the authorised share capital of the Company from      
    HK$100,000,000 divided into 2,000,000,000 Shares to HK$500,000,000        
    divided into 10,000,000,000 Shares by creation of an additional           
    HK$400,000,000 divided into 8,000,000,000 Shares.                         
                                                                              
    The increase in the authorised share capital of the Company is            
    conditional upon the passing of an ordinary resolution by the             
    Shareholders at the EGM.                                                  
                                                                              
    (4)   SHAREHOLDERS CIRCULAR