09:16 MAN YUE INT'L<00894> - Announcement (2) CONNECTED TRANSACTION The Group is principally engaged in the manufacture and trading of electronic components, the trading of electrical products, raw materials and production machinery. Wuxi Heli, an indirect 81.67%-owned subsidiary of the Company, is principally engaged in the manufacture and sale of electronic components. The JV Partner is principally engaged in the manufacture of electronic components. Wuxi Heli was set up by Johnstone International and the JV Partner established under the laws of the PRC. The Company was interested in 40% of Wuxi Heli upon its formation in 1992. Subsequently over the years, the Company has increased its shareholding in Wuxi Heli for a number of times to 81.67%. At the time of the transaction, Wuxi Heli was an 81.67%-owned subsidiary of the Company and the JV Partner was a substantial shareholder of Wuxi Heli and hence a connected person as defined under the Listing Rules. Accordingly, the Acquisition constituted a connected transaction of the Company under the Listing Rules. Save for the connected transaction as disclosed in this announcement, the JV Partner does not have any other relationship with the Company and its connected persons which constitutes a connected transaction under the Listing Rules. The net profits of Wuxi Heli before taxation for the years ended 31 December 2002 and 2003 were approximately HK$4.9 million and HK$1.0 million respectively. The net profit for Wuxi Heli after taxation for the year ended 31 December 2002 was approximately HK$3.2 million and the net loss for Wuxi Heli after taxation for the year ended 31 December 2003 was approximately HK$0.6 million. The connected transaction falls within 14A.32 of the Listing Rules and the Company is exempt from independent shareholder's approval requirement. Details of the transaction will be included in the next published annual report and accounts of the Company pursuant to Rule 14A.45 of the Listing Rules. REASONS FOR THE CONNECTED TRANSACTION Upon completion of the Acquisition, Wuxi Heli has become a wholly-owned subsidiary of the Company. The Acquisition enables the Group to fully own Wuxi Heli which in turn facilitates its deployment and allocation of its manufacturing facilities and trading resources within the Group. The Directors consider that the terms of the transaction were determined on an arm's length basis and on normal commercial terms between the parties involved. The Directors (including the independent non-executive Directors) are of the view that as far as the shareholders of the Company are concerned, the connected transaction is fair and reasonable and in the best interests of the Company and its shareholders as a whole. DEFINITIONS In this announcement, unless the context requires otherwise, the following terms have the meanings as set out below: "Acquisition" An increase in equity interest in Wuxi Heli from 81.67% to 100% pursuant to a Sale and Purchase Agreement dated 30 December 2004 entered into between Johnstone International and the JV Partner "Company" Man Yue International Holdings Limited, a company incorporated in Bermuda with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange "Consideration" RMB8,959,700 (approximately HK$8,452,547), being the amount paid by Johnstone International to the JV Partner for the Acquisition "Directors" the directors of the Company "Group" the Company and its subsidiaries "HK$" Hong Kong dollars, the lawful currency of Hong Kong SAR "Hong Kong" the Hong Kong Special Administrative Region of the PRC "Johnstone International" Johnstone International Limited, a company incorporated in the British Virgin Islands and a wholly owned subsidiary of the Company