09:33 TIAN AN<00028> - Announcement (3) the registered capital of Tiandu. Tiandu is principally engaged in property development and investment in the PRC and has been involved in the development and management of one of the Group's major commercial and residential property project named "Nanjing Tian An International Building", the Property. The Property is a commercial and residential development located at the commercial hub of Nanjing City, the PRC and is located on top of a future subway station. The podium levels (levels 1-8) of the Property has a total gross floor area of 51,841 square meters and has been leased to a department store. The rest of the unsold parts of the Property are offices (levels 9-12) of 11,500 square meters and a residential apartment of 93 square meters which can be offered for sale. According to the management accounts of Tiandu for the year ended 31st December, 2003, Tiandu recorded a net loss before and after taxation of approximately RMB4,081,500 (equivalent to approximately HK$3,850,500) and approximately RMB4,081,500 (equivalent to approximately HK$3,850,500) respectively. The net assets of Tiandu as at 31st December, 2003 was approximately RMB171,804,400 (equivalent to approximately HK$162,079,600). According to the management accounts of Tiandu for the year ended 31st December, 2002, Tiandu recorded a net loss before and after taxation of approximately RMB4,971,400 (equivalent to approximately HK$4,690,000) and approximately RMB4,971,400 (equivalent to approximately HK$4,690,000) respectively. The net assets of Tiandu as at 31st December, 2002 was approximately RMB49,222,500 (equivalent to approximately HK$46,436,300). LISTING RULES IMPLICATIONS OF THE ACQUISITION AGREEMENTS Changfa and Jianye are connected persons of the Company as Changfa and Jianye, each holding a 20% interest in the registered capital of Tiandu, are Substantial Shareholders of Tiandu, which is a non-wholly owned subsidiary of the Company. The acquisitions pursuant to the Acquisition Agreements thus constitute connected transactions of the Company under Rule 14A.13(1)(a) of the Listing Rules and would be aggregated under the Listing Rules. As a result, the Acquisition Agreements and the transactions contemplated thereunder constitute a non-exempt connected transaction of the Company under Rule 14A.16(5) of the Listing Rules (by virtue of the fact that the aggregated assets ratio and revenue ratio are more than 2.5% but less than 25% and the aggregated total considerations payable by TA Shanghai to Changfa and Jianye for the acquisitions under the Acquisition Agreements exceeds HK$10,000,000 and are therefore subject to the requirements of reporting, announcement and approval by the Shareholders (by way of poll) at the EGM as set out in Chapter 14A of the Listing Rules. To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, no Shareholder is required under the Listing Rules to abstain from voting on the resolution(s) regarding the Acquisition Agreements and the transactions contemplated thereunder at the EGM. The Independent Board Committee will be formed to advise the Shareholders in relation to the Acquisition Agreements. An independent financial adviser will be appointed to advise the Independent Board Committee and the Shareholders as to whether the terms of the Acquisition Agreements are fair and reasonable so far as the Shareholders are concerned. REASONS FOR THE CONNECTED TRANSACTIONS As a result of the acquisitions contemplated under the Acquisition Agreements, Tiandu shall become a wholly owned subsidiary of the Company. The Property is located at a prime location at the city center of Nanjing on top of a future subway station under construction which, when completed, will guarantee a steady stream of visitors to the Property. Although the Property was only recently completed in 2003, since the podium levels (levels 1-8) of the Property is currently leased to a department store, it is expected that the Property will have stable income-generating capability. As such, the Company does not expect Tiandu to continue to be loss-making in view of the reasons set out above. As such, the Company's decision to acquire an additional 40% interest in Tiandu is in line with its intention to strengthen its rental property portfolio as long term investment. In view of the positive outlook of the property market in the PRC, the Company considers that Tiandu has good financial prospects in the long term. As a result, the Company has decided to purchase an additional 40% interest in Tiandu. The Directors (excluding the Independent Non-Executive Directors who will form the Independent Board Committee which will obtain advice from the independent financial adviser to be appointed) are of the view that the terms of the Acquisition Agreements were agreed after arm's length negotiations and are fair, reasonable and on normal commercial terms