10:12 TCC INT'L HOLD<01136> - Announcement (2) Anhui Conch has since TCC Fuzhou's cement production operation commenced recently in November 2004 been supplying clinker to TCC Fuzhou at market price for TCC Fuzhou's production of cement, the existing annual aggregate amount of which is below the de minimis ratio for the continuing connected transactions under Rule 14A.33 of the Listing Rules. TCC Fuzhou's cement production volume in November 2004 is approximately 10,000 MT. The value of the clinker supplied by Anhui Conch to TCC Fuzhou in 2004 is approximately RMB854,000. TCC Fuzhou intends to purchase clinker on a recurring basis from Anhui Conch and Anhui Conch agrees to supply such clinker to TCC Fuzhou as requested. Accordingly, TCC Fuzhou entered into a Clinker Supply Agreement with Anhui Conch on 31 December 2004 for a term of three years from 1 January 2005 to 31 December 2007 to govern the supply of clinker by Anhui Conch to TCC Fuzhou on a recurring basis, which constitutes non-exempt continuing connected transactions of the Company under Rule 14A.35 of the Listing Rules. As at the date of this announcement, the relevant transaction under the Clinker Supply Agreement has yet to commence. 1.2 Transactions with Liuzhou Qingyu Liuzhou Steel is a substantial shareholder of TCC Liuzhou, a company in which a 70%-owned subsidiary of the Company holds a 60% equity interest and Liuzhou Steel holds a 40% equity interest. Liuzhou Qingyu is a wholly-owned subsidiary of Liuzhou Steel. As such, Liuzhou Qingyu is a connected person of the Company as defined in the Listing Rules and transactions between Liuzhou Qingyu and TCC Liuzhou, a subsidiary of the Company, constitute connected transactions under the Listing Rules. Liuzhou Steel is principally engaged in the manufacture and distribution of steel products and Liuzhou Qingyu is a wholly-owned subsidiary of Liuzhou Steel principally engaged in the disposal of some of the waste materials generated by Liuzhou Steel's manufacturing process, including slag. Slag is a waste material generated in the production process of steel products. The utilisation of slag as a construction material is encouraged by the PRC government. According to the joint venture agreement relating to TCC Liuzhou entered into between Liuzhou Steel and the Group, Liuzhou Steel is committed to supply sufficient quantity of slag to TCC Liuzhou for its production of slag powder. TCC Liuzhou is expected to commence commercial operation in the second quarter of 2005. TCC Liuzhou entered into a Slag Supply Agreement with Liuzhou Qingyu on 31 December 2004 for a term of three years from 1 January 2005 to 31 December 2007 to govern the supply of slag by Liuzhou Qingyu to TCC Liuzhou on a recurring basis, which constitutes non-exempt continuing connected transactions of the Company under the Listing Rules. As at the date of this announcement, the relevant transaction under the Slag Supply Agreement has yet to commence. 1.3 Transactions with Fuzhou Logistics Fuzhou Logistics is a fellow subsidiary of TCC Fuzhou. As such, Fuzhou Logistics is a connected person of the Company as defined in the Listing Rules and transactions between Fuzhou Logistics and TCC Fuzhou, a subsidiary of the Company, constitute connected transactions under the Listing Rules. Fuzhou Logistics is principally engaged in the provision of logistics services. TCC Fuzhou and Fuzhou Logistics entered into a Supply of Logistics Services Agreement on 31 December 2004 for the term from 1 January 2005 to 31 December 2007 to govern the supply of logistics services by Fuzhou Logistics to TCC Fuzhou on a regular basis which constitutes exempt continuing connected transactions of the Company under the Listing Rules. In addition, TCC Port and Fuzhou Logistics entered into a Supply of Unloading Services Agreement on 31 December 2004 for the term from 1 January 2005 to 31 December 2007 to govern the supply of unloading services by Fuzhou Logistics to TCC Port on a regular basis which constitutes exempt continuing connected transactions of the Company under the Listing Rules. 2. NON-EXEMPT CONTINUING CONNECTED TRANSACTION AGREEMENTS 2.1 Terms and conditions of the Clinker Supply Agreement TCC Fuzhou entered into the Clinker Supply Agreement with Anhui Conch on 31 December 2004 for a term of three years from 1 January 2005 to 31 December 2007 to govern the supply by Anhui Conch to TCC Fuzhou of clinker which may be required and requested from time to time by TCC Fuzhou in the ordinary and usual course of business of both TCC Fuzhou and Anhui Conch. (A) General principles The Clinker Supply Agreement requires, in general terms, that (1)