09:16 DIGITAL CHINA<00861> - Announcement (2) As GE and TIS are each a substantial shareholder of DGT, GE, TIS and their respective associates are regarded as connected persons of the Company. Save for the foregoing, to the best of the Directors' knowledge, information and belief having made all reasonable enquiry, GE and TIS and their respective ultimate beneficial owners are third parties independent of the Group and the connected persons of the Group. From October 2003 to 31 March 2004 and from 1 April 2004 up to end of November 2004, 12 and 17 GE Transactions and 12 and 39 TIS Transactions had been entered into respectively, and none of these transactions had a value exceeded HK$1,000,000. All such GE Transactions and TIS Transactions entered into by the DGT Group were negotiated and concluded individually and separately and they were distinctive from and unrelated to each other in terms of their technological requirements. Prices for each of the GE Transactions and the TIS Transactions were negotiated on normal commercial terms between the parties with reference to the market prices of the services available to DGT through its established network and informal channels. For so long as the prices offered are competitive and the DGT Group meets the technological requirements of GE or TIS or their respective associates (as the case may be), it is expected that the DGT Group will enter into the GE Transactions and the TIS Transactions on a regular and continuing basis. For the purposes of regulating the GE Transactions and the TIS Transactions, DGT has entered into (i) the GE Agreement with GE for a term commencing on 1 April 2004 and ending on 31 December 2006; and (ii) the TIS Agreement with TIS for a term commencing on 1 April 2004 and ending on 31 March 2007. In accordance with both the GE Agreement and the TIS Agreement, the prices to be offered under each of the GE Transactions and the TIS Transactions shall be competitive, on normal commercial terms, and determined by the relevant contracting parties on arm's length negotiations based on the market prices of the services available to DGT through its established network and informal channels and having regard to the quantity, technological requirements and/or other conditions of the services to be provided. The payment terms of each individual transaction will be determined by the relevant contracting parties at the time of entering into each relevant transaction which will be on normal commercial terms. The credit term offered by the DGT Group is generally a period of two months. The entering into of the GE Agreement and the TIS Agreement has resulted in the GE Transactions and the TIS Transactions conducted and to be conducted under the two aforesaid agreements becoming continuing connected transactions of the Company under Chapter 14A of the Listing Rules. The Directors (including the three independent non-executive Directors) expect that the DGT Group will continue to enter into the GE Transactions and the TIS Transactions pursuant to the GE Agreement and the TIS Agreement, on a continuing and regular basis, in the ordinary and usual course of business of the Group and on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to the Group than terms available to or from independent third party customers, and will be fair and reasonable and in the interests of the shareholders of the Company as a whole. It is anticipated that on an annual basis, the maximum aggregate values (``caps'') of: (a) the GE Transactions will not exceed HK$10,800,000, HK$18,600,000 and HK$24,000,000 for the two financial years ending 31 March 2005 and 2006 and the nine months ending 31 December 2006, respectively; and (b) the TIS Transactions will not exceed HK$25,000,000, HK$33,000,000 and HK$43,000,000 for the three financial years ending 31 March 2007, respectively. The caps were calculated on the following basis: (a) the caps of both the GE Transactions and the TIS Transactions for the financial year ending 31 March 2005 were determined with reference to: (i) the expected volume of services required from the DGT Group by GE and TIS and/or their associates in that year as indicated by the representatives of GE and TIS at DGT's board meetings; and (ii) the capabilities of the DGT Group in terms of staff and technical know-how in providing the required services; and (b) the caps of the GE Transactions for the financial year ending 31 March 2006 and the nine months ending 31 December 2006 were determined with reference to: