09:43     SHOUGANG INT'L<00697> - Announcement (3)                            

    BSFPCL is a subsidiary of the Company and is a Sino-foreign               
    joint venture established in the PRC and owned as to 51% by               
    the SCPPHL and as to 49% by Shougang Corporation. Shougang                
    Corporation is a PRC state-owned enterprise and is one of the             
    largest steel producers in the PRC. It is the holding company             
    of Shougang Holding which in turn is a substantial shareholder            
    of the Company. Accordingly, transactions between BSFPCL and              
    Shougang Corporation and/or its associates will constitute                
    connected transactions of the Company under the Listing Rules.            
                                                                              
    The Continuing Connected Transactions are subject to reporting,           
    announcement and Independent Shareholders' approval                       
    requirements pursuant to Rule 14A.35 of the Listing Rules.                
                                                                              
    The Directors consider that the Continuing Connected                      
    Transactions will be entered into in the usual and ordinary               
    course of businesses of the Group and the terms of the                    
    Continuing Connected Transactions have been negotiated and                
    will be conducted on an arm's length basis and on normal                  
    commercial terms, between the Group and Shougang Corporation.             
                                                                              
    The Directors are of the view that as far as the Independent              
    Shareholders are concerned, the Continuing Connected                      
    Transactions and the terms thereof are fair and reasonable and            
    in the interests of the Group and the Independent Shareholders            
    as a whole.                                                               
                                                                              
    The Company will therefore seek the approval by the                       
    Independent Shareholders of the Master Agreement and the                  
    respective caps in relation to the Continuing Connected                   
    Transactions for a period of three financial years ending 31              
    December 2007 on the following conditions:                                
                                                                              
    (a)   Cap amounts for the Continuing Connected Transactions               
    under the Master Agreement for each of the three financial                
    years ending 31 December 2007 will not exceed:                            
                                                                              
    (i)   HK$300 million for the Purchases; and                               
                                                                              
    (ii)   HK$450 million for the Sales.                                      
                                                                              
    (b)   The Continuing Connected Transactions will be in                    
    compliance with the followings:                                           
                                                                              
    (i)   the Continuing Connected Transactions will be entered               
    into in the usual and ordinary course of businesses of the                
    Group;                                                                    
                                                                              
    (ii)   the Continuing Connected Transactions will be conducted            
    in accordance with: (1) state-quoted price, if the pricing of             
    such a transaction is governed by the pricing policies of the             
    PRC; (2) a direct comparable market price, if the transaction             
    is not governed by the pricing policies of the PRC and a                  
    direct comparable market price is available; or (3) by                    
    agreement between the parties based on reasonable principle,              
    if the transaction is not governed by the pricing policies of             
    the PRC and no direct comparable market price can be taken as             
    a reference; and                                                          
                                                                              
    (iii)   the Continuing Connected Transactions will be entered             
    into in accordance with the terms of the Master Agreement.                
                                                                              
    (c)   Brief details of the Continuing Connected Transactions              
    will be disclosed in the Company's next and each successive               
    annual report and accounts, each accompanied with a statement             
    of opinion of the independent non-executive Directors in such             
    manner as referred to in paragraph (d) below.                             
                                                                              
    (d)   The independent non-executive Directors will review                 
    annually the Continuing Connected Transactions, and confirm in            
    the Company's annual report and accounts for the year in                  
    question that such Continuing Connected Transactions under                
    their review have been conducted in the manner as stated in               
    paragraphs (a) and (b) above.                                             
                                                                              
    (e)   The auditors of the Company will review annually the                
    Continuing Connected Transactions, and they will confirm in a             
    letter to the Directors (a copy of which letter will be                   
    provided to the Stock Exchange at least 10 Business Days prior            
    to the bulk printing of the annual report of the Company) in              
    respect of each relevant financial year, during which the                 
    Continuing Connected Transactions have been conducted, stating            
    that:                                                                     
                                                                              
    (i)   the Continuing Connected Transactions have been approved            
    by the Directors;