09:37 BEIJING AIRPORT<00694> - Announcement (1) The Stock Exchange of Hong Kong Limited 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. BEIJING CAPITAL INTERNATIONAL AIRPORT COMPANY LIMITED (a Sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 0694) CONTINUING CONNECTED TRANSACTION The Board wishes to announce that the Project Agreement was entered into between the Company and Construction Corporation, a wholly-owned subsidiary of Parent Company on 18 January 2005. Pursuant to the Project Agreement, Construction Corporation has agreed to provide certain project management services in relation to the Project to the Company. Pursuant to the Project Agreement, Service Fees are payable by the Company to Construction Corporation. Such fees comprise of the following: (a) the Basic Fee. The Basic Fee shall be equivalent to 80% of the approved project management costs for each particular work under the Project. Such percentage has been determined with reference to the proportion of the project management services proposed to be undertaken by Construction Corporation in relation to the Project, as compared to those proposed to be undertaken by the Company. The approved project management costs are pegged to the range of 1.6% - 2.4% of the estimated investment amount for each work under the Project as prepared by the Company and approved by CAAC or its authorized institution, in compliance with the "Measures on Preparing the Budget Proposal of Civil Airports' Construction Projects" issued by CAAC on 10 May 2001; and (b) the Incentive Fee. The Incentive Fee shall be payable upon completion of each particular work under the Project if such work shall have been completed within the specified timeframe and delivered in accordance with the quality standard set out in the Project Agreement, and if the actual construction cost for such work is less than the budgeted construction cost. The Incentive Fee shall be equal to 50% of the difference between the actual construction cost and the budgeted construction cost. Parent Company is the controlling shareholder of the Company holding approximately 65% of the issued share capital of the Company. Construction Corporation is a wholly-owned subsidiary of the Parent Company. Therefore, Construction Corporation constitutes an associate of Parent Company and hence a connected person of the Company. Accordingly, the Transaction constitutes a continuing connected transaction of the Company under Rule 14A.14 of the Listing Rules. The terms and conditions of the Project Agreement have been negotiated on an arm's length basis and are normal commercial terms. The Transaction is in the ordinary and usual course of business of the Company. The Board (including the independent non-executive Directors) considers that the Transaction is fair and reasonable, and is in the interests of the Company and the Shareholders as a whole. As each of the percentage ratio(s) (other than the profits ratio) in respect of the Transaction is, on an annual basis, more than 0.1 % but less than 2.5%, the Transaction only subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Listing Rules but does not require approval by the Independent Shareholders. A. THE PROJECT To facilitate Beijing Airport's expansion work and to better utilize its existing facilities, the Company proposes to renovate the airfield area (mainly in the west zone) of Beijing Airport. The Project comprises several individual Sub-projects which can be independently operated and completed. The Project will be undertaken in stages. It is expected to be completed by the end of 2007. The Project, comprising of the renovation of the west runway airfield area and the east runway airfield area of Beijing Airport, includes the following Sub-projects: (i) West Runway Airfield Area 1. construction of 2 new high speed exits and 2 new U taxiways at the west runway airfield area;