SA SA INT'L<0178> - Announcement

The Stock Exchange of Hong Kong Limited (the "Stock Exchange") 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.

SA SA International Holdings Limited
(the "Company")
(Incorporated in the Cayman Islands with limited liability)

Connected Transactions

Summary

On 22nd January, 1998, Sa Sa Cosmetic Company Limited ("Cosmetic"), 
a subsidiary of the Company, relying on advice given, made a payment 
in the amount of HK$40,660,987.37 (the "First Payment") to Mr. Kwok 
Siu Ming, Simon ("Mr. Kwok"), the chairman of the Company, to cover 
a proportion of the expenses incurred by Mr. Kwok for the purpose of 
the initial public offering ("IPO") of shares in the Company 
("Shares"). At the time of the First Payment, the executive 
Directors took the view that the making of the First Payment was on 
normal commercial terms. Mr. Kwok was subsequently notified that the 
First Payment was made in contravention of the terms of the 
prospectus issued by the Company in June 1997 relating to the IPO 
(the "Prospectus") and immediately returned the same amount to 
Cosmetic in June 1998 (the "Second Payment"), together with a sum of 
HK$2,063,664.05 ("Interest") in July 1999 representing compensation 
to Cosmetic for accrued interest.

The First Payment and the Second Payment (together the "Payments") 
constitute connected transactions for the Company in accordance with 
Chapter 14 of the Rules Governing the Listing of Securities on The 
Stock Exchange of Hong Kong Limited (the "Listing Rules") and should 
have been disclosed and made subject to approval of shareholders 
other than Mr. Kwok and his Associates (as defined in the Listing 
Rules) ("Independent Shareholders").

Background

As part of the arrangements for the IPO in June 1997, Mr. Kwok 
agreed to give 52.48 million shares in the Company ("Subject 
Shares") to a consultant (the "Consultant") in recognition of the 
assistance which the Consultant has given to the Company in relation 
to the IPO. This was disclosed in the Prospectus. This amount was 
not included as part of the estimated expenses of the IPO payable by 
the Company in the Prospectus as Mr. Kwok was of the view that such 
amount did not form part of the Company's expenses.

In August 1997, Mr. Kwok received advice that expenses incurred in 
connection with the IPO should in fact be borne by the Company and 
its subsidiaries (the "Group"). The board of executive directors' 
meeting approved a payment of HK$38,220,134.40 ("First Sum") to the 
Consultant on 15th August, 1997. This sum represented a proportion 
of the expenses incurred by Mr. Kwok (that is, by giving the Subject 
Shares to the Consultant) for the purpose of the IPO which was for 
the benefit of the public shareholders. This sum was determined 
based on a formula using the issue price of the Shares at the time 
of the IPO of HK$2.38. In fact, the Shares were trading at around 
HK$3.20 at that time.

In January 1998, Mr. Kwok received advice that he was entitled to 
interest on the First Sum from the date of the IPO until the date of 
payment at 10.5% per annum. The First Payment, which is 
HK$40,660,987.37, was paid by Cosmetic to Mr. Kwok's nominee, 
Electron Consultants Limited on 22nd January, 1998 (the "First 
Payment") instead of to the Consultant, as Mr. Kwok's agreement with 
the Consultant was that the Consultant was to receive Shares and 
therefore the Company paid Mr. Kwok's nominee in cash.

In June 1998, the Company was advised that the First Payment was 
made in contravention of the terms of the Prospectus. Upon 
notification, Mr. Kwok accepted that an error had been made and 
immediately returned an amount equal to the First Payment (the 
"Second Payment") to Cosmetic in two tranches on 29th and 30th June, 
1998.

On 15th July, 1999, Mr. Kwok paid the Interest to Cosmetic in the 
aggregate amount of HK$2,063,664.05, being the interest which 
Cosmetic could have been earned during the period whilst the money 
was out of its hands.

Reasons for the transaction

The Group made the First Payment on advice that it is normal 
practice for expenses in connection with a company's IPO to be borne 
by the Group and not its controlling shareholder. The Second Payment 
was made by Mr. Kwok as soon as he realised that he has relied on 
incorrect advice and was made to reverse the First Payment.

General

At the time of the First Payment, relying on the aforesaid advice 
that it is normal practice that expenses incurred for the purpose of 
the IPO should be paid by the Company and not the controlling 
shareholder, the executive Directors then formed the view that the 
making of the First Payment was on normal commercial terms.

Mr. Kwok (the chairman of the Company) and Ms. Law Kwai Chun, 
Eleanor, his wife who is also an executive director of the Company, 
are together controlling shareholders (as defined in the Listing 
Rules) of the Company. Therefore, the Payments constitute connected 
transactions for the Company pursuant to the Listing Rules and 
should have been disclosed by way of a press announcement. As both 
payments exceeded 3% of the consolidated net tangible assets of the 
Company based on the then latest published accounts, the Payments 
should also have been made subject to Independent Shareholders' 
approval. The failure to do so constituted a breach of the Listing 
Rules.

The First Payment was included in the deposits, prepayments and 
other receivables account in the financial statements for the year 
ended 31st March, 1998 when it was decided that the First Payment 
should be refunded to Cosmetic. The First Payment should have also 
been disclosed as an amount due from Mr. Kwok, a director of the 
Company, in the financial statements for the year ended 31st March, 
1998 together with the terms of this amount due and this additional 
disclosure was omitted in the financial statements for the year 
ended 31st March, 1998.

The First Payment, Second Payment and the Interest (collectively 
referred as the "Transactions") had no effect on the loss for the 
year ended 31st March, 1999 ("the Loss") and the net assets at 31st 
March, 1999 ("the Net Assets") except that the Interest which 
covered the period from January 1998 to July 1999 paid to Cosmetic 
in July 1999 has been credited in full in arriving at the Loss and 
the Net Assets but the effect on the Loss and the Net Assets is 
insignificant.

The Transactions have been properly disclosed in the 31st March, 
1999 annual report.

Due to an oversight, the Payments were not brought to the attention 
of the Stock Exchange when they were made. As soon as the Directors 
were aware of the oversight, the matter was reported to the Stock 
Exchange on 24th July, 1999. Thereafter, the Company immediately 
proceeded to gather information for the preparation of this 
announcement to inform shareholders about the details of the 
Payments.

The Stock Exchange reserves its rights to take further action in 
relation to the matters mentioned above.

By Order of the Board
Sa Sa International Holdings Limited
Mok Yuen Yin, Anne
Company Secretary

Hong Kong, 2nd August, 1999