S. DRAGON(08493): Enforcement Sale Has Released the Group from Most of Its Repayment Obligations Under the PIL Loan and the GP Loan

S. DRAGON (08493) announces that, as disclosed in the 2025 annual report, the Group's total bank and other borrowings as at 31 December 2025 amounted to approximately HK$84.2 million, comprising approximately HK$15.9 million, being the outstanding amount owed by Whole Harvest to HANG SENG BANK Limited under the property instalment loan granted by HANG SENG BANK (the PIL Loan), which PIL Loan is secured by a charge in favour of HANG SENG BANK over the property held by Whole Harvest at House 2, Moritz Avenue, The Valais II, 33 Kwu Tung Road, Sheung Shui, New Territories (the Property); and approximately HK$10.3 million, being the outstanding amount owed by Gold Profit to HANG SENG BANK under certain loan facilities granted by HANG SENG BANK (the GP Loan), which GP Loan is also secured by a charge in favour of HANG SENG BANK over the Property. In the course of conducting due diligence in relation to the possible transaction, the Company obtained a land search report in respect of the Property on 18 September 2026 and was informed that HANG SENG BANK had on 5 March 2026 exercised its security rights over the Property and sold it (the Enforcement Sale). According to the land search report, the Property was sold for approximately HK$24.4 million. Upon completion of the Enforcement Sale, the Group no longer holds any interest in the Property. The Group is expected to be unable to recover any amount from the sale proceeds of approximately HK$24.4 million, as such proceeds have been applied to settle the PIL Loan and the GP Loan. Based on the sale proceeds of approximately HK$24.4 million and the carrying amount of the Property of approximately HK$24.7 million as at 31 December 2025, the Group is expected to record a loss on disposal of approximately HK$0.3 million as a result of the Enforcement Sale. The actual gain or loss recorded by the Group as a result of the Enforcement Sale is subject to final review by the Company's auditors. The Board considers that the Enforcement Sale has released the Group from most of its repayment obligations under the PIL Loan and the GP Loan, and as the Property has been vacant and unused by the Group for a long period of time, the Enforcement Sale has no material impact on the Group's business operations. The Company is currently seeking professional advice to obtain further details regarding the Enforcement Sale.