09:18 NAM FONG INT'L<01176> - Announcement (2) the Loan and release of the Secured Property to the Group if GZ Sui Nan would pay a further sum of HK$19,100,000 on or before 25 November 2004. As announced by the Company on 25 November 2004, the High Court granted a dismissal order on 22 November 2004 to dismiss the winding- up petition (HCCW735/2004). Since 5 May 2003 (being the first repayment date) up to 20 November, 2004, the Company and GZ Sui Nan have repaid to NCB in aggregate about HK$42,720,000 (i.e. HK$9,720,000 more than the principal of the Loan) and NCB also has the discretion of the Secured Property (i.e. NCB can dispose the Secured Property under PRC's law according to NCB's own discretion), therefore, GZ Sui Nan did not pay HK$19,100,000 as GZ Sui Nan needed to process the negotiation with NCB in order to reach a better settlement schedule. Since then, the Company and GZ Sui Nan have been negotiating with NCB on the final settlement of the Loan and the release of the Secured Property. No agreement is reached. However, on 4 February 2005, NCB filed the Petition (HCCW113/2005) in the High Court against the Company. The Company is now working with NCB on final settlement of the Loan and the release of the Secured Property. Terms and conditions of which have not yet been finalized. Further announcement will be made as and when appropriate. The amount of the Petition (HK$31,000,000) is about 2.7% and 53.8% of the total assets value and net assets value of the Group as at 31st December, 2004 respectively as disclosed in 2004 annual report. As at 31 December 2004, Greater China Appraisal Limited, a registered and qualified valuation firm in Hong Kong, basis on the open market value, valued the total investment properties of the Group was HK$735,000,000 of which with valuation of approximate HK$72,780,000 (i.e. the Secured Property) and HK$25,000,000 has been pledged to NCB and a finance company for loans respectively. The Group has investment properties which are not subject to any pledges and are freely transferable of approximately HK$637,220,000. As disclosed in 2004 annual report, the Group disposed two units of Liwan Plaza (which boosted the percentage of the net assets value of the Group as at 31 December 2004) and recorded incomes from sales or properties of approximately HK$40,600,000 and rental income under tenancy agreement from the investment properties of approximate HK$19,100,000 for the year ended 31 December 2004, cash balance HK$85,000 and inventory of completed properties held for sale of approximately HK$3,600,000 as at 31 December 2004. The property-market in Guangzhou is active in recent years. The Board believes that if necessary, the Group can dispose some of the properties in short time and has the ability to repay the Loan together with interests and the related cost due to NCB. Trading in the shares of the Company on the Stock Exchange was suspended from 10:45 a.m. on 7 February 2005 at the request of the Company to the Stock Exchange pending for the release of the announcement in relation to the winding-up petition against the Company by NCB. Trading in the shares of the Company on the Stock Exchange will remain suspended pending the demonstration by the Company to the satisfaction of the Stock Exchange that, among others, the continuing listing of the shares of the Company is warranted. Further announcement will be made as and when appropriate. Investors should exercise extreme caution when dealing in the shares of the Company. By Order of the Board Tong Shi Jun Chairman Hong Kong, 17 May 2005 As at the date hereof, the Board comprises Mr. Tong Shi Jun (Chairman), Mr. Zhang Jian (Deputy Chairman), Mr. Zhao Lishen, Mr. Chiu Kong, Ms. Huang Ling and Ms. Zhu Jun as executive directors and Mr. Chen Song Sheng, Ms. Chang Ling and Ms. Zhou Mei Zhen as independent non-executive directors. * For identification purposes only