CRITICISM -- Easyknit International Holdings Limited (the "Company") and Mr Alan Tsang Yiu Kai and Mr Koon Wing Yee (collectively, the "Relevant Directors")

At a disciplinary hearing held on 29 April 2003 (the "Disciplinary Hearing"), the Listing Committee of the Exchange (the "Listing Committee") conducted a hearing into the conduct of, among others, the Company and the Relevant Directors, namely, Mr Alan Tsang Yiu Kai and Mr Koon Wing Yee (both executive directors of the Company).

On 5 June 2001, Magical Profits Limited ("Magical Profits") entered into a placing agreement with Sun Growth Securities Ltd. (the "Placing Agent"). On the same day, Magical Profits also entered into a subscription agreement (the "Subscription Agreement") with the Company. In an announcement of the Company dated 5 June 2001, it provided that, among other things, the subscription under the Subscription Agreement (the "Subscription") was "expected to occur on or before 19 June 2001, (or such later date as the Subscriber and the Placing Agent may agree and subject to compliance with the Listing Rules)". Further, if completion did not occur on or before 19 June 2001, the Subscription would constitute a connected transaction under the Exchange Listing Rules, in which case the Company would be required to comply with the relevant requirements under the Exchange Listing Rules.

On 8 June 2001, Magical Profits, the Company and the Placing Agent applied to the Securities and Futures Commission (the "SFC") for a waiver from the requirement to make a general offer pursuant to the Code on Takeovers and Mergers. On 19 June 2001, the SFC had not granted the waiver and was still considering the waiver application. On the same day, Magical Profits and the Placing Agent agreed in principle to extend the long-stop date for satisfaction of the conditions precedent until 16 July 2001. On 3 July 2001, the Exchange confirmed that it would not grant the Company a waiver from the connected party transaction requirements under the Exchange Listing Rules. Magical Profits and the Placing Agent agreed to terminate the transaction.

The Disciplinary Hearing was conducted into, among other things, the following issues:

• Possible breach by the Company of its obligation under paragraph 2 of the Listing Agreement in failing to make an announcement on 19 June 2001 or as soon as reasonably practicable about: (i) the fact that the Company could not fulfill the conditions precedent on or before 19 June 2001; (ii) the fact that the Subscription was not being completed on or before 19 June 2001; and/or (iii) the fact that Magical Profits and the Placing Agent agreed in principle on 19 June 2001 to extend the long-stop date for satisfaction of the conditions precedent until 16 July 2001; and
• Possible breaches by the Relevant Directors (among others) of their obligations under the Declaration and Undertaking with regard to Directors given by them to the Exchange in the form set out in Appendix 5B of the Exchange Listing Rules (the "Directors Undertaking").

The Listing Committee concluded, among other things, that:

1. the Company was in breach of paragraph 2 of the Listing Agreement; and
2. the Relevant Directors had breached their Directors Undertaking to use their best endeavours to procure that the Company would so comply.

Accordingly, the Listing Committee hereby publicly criticises the Company and each of the Relevant Directors for their respective breaches mentioned in (1) and (2) above.

For the avoidance of doubt the Exchange confirms that this public statement which involves criticism applies only to the Company and the Relevant Directors named herein and not to any other past or present member of the Board of Directors of the Company.