10:19     SINOPEC KANTONS<00934> - Announcement (4)                           

    December 2003 were approximately HK$724.13 million and                    
    HK$1,101.1 million.                                                       
                                                                              
    The Directors expect that this connected transaction will                 
    continue and the monetary amount will increase. The aggregate             
    transaction amounts paid by the Group will be within a maximum            
    annual cap of HK$1,300 million, HK$1,500 million and HK$1,600             
    million for each of the three financial years ending 31 December          
    2005, 31 December 2006 and 31 December 2007 respectively.                 
                                                                              
    Reasons for the transactions and cap                                      
                                                                              
    The Group entered into the connected transaction because of the           
    close proximity of the Kantons Petrol Stations to Guangdong               
    Company and the availability and quality of the products, which           
    are more economical to KGSIM.                                             
                                                                              
    In arriving at the cap, the historical figures were taken into            
    account. Given its trading nature, the amount of business to              
    be conducted is market and customer demand driven. The Directors          
    have considered the expected increase in the consumption of               
    gasoline and other petroleum products in the Guangzhou Province;          
    the expected improvement and development of the Kantons Petrol            
    Stations; the volatility and possible increase of the price of            
    gasoline and other petroleum products in the PRC and the                  
    international market; and the cost of refining crude oil into             
    petroleum products which may possibly increase.                           
                                                                              
    3.      Third party processing                                            
                                                                              
    Nature of the transaction and connected parties                           
                                                                              
    The Group has engaged and will continue to engage Sinopec                 
    Guangzhou Branch to refine and process crude oil into various             
    types of petroleum products on behalf of the Group.                       
                                                                              
    Pricing basis and the cap                                                 
                                                                              
    Under the Sinopec Corp. Framework Master Agreement, the Group             
    will enter into separate written third party processing                   
    agreements not exceeding 3 years with Sinopec Guangzhou Branch            
    for the processing of crude oil on a transaction by transaction           
    basis. The parties will negotiate with reference to, among other          
    factors, market conditions, normal commercial terms, trade                
    customs and the principle of fairness and will conclude the               
    detailed terms and provisions in the contracts and the agreements.        
                                                                              
    Under the Sinopec Corp. Framework Master Agreement, the prices            
    payable are to be determined on a cost plus reasonable profits            
    basis and are to be agreed between the parties on an arm's length         
    basis through negotiations.                                               
                                                                              
    The aggregate amounts paid by the Group in respect of these               
    connected transactions for each of the two years ended 31                 
    December 2003 were approximately HK$90.91 million and HK$52.97            
    million.                                                                  
                                                                              
    The Directors expect that these connected transactions will               
    continue and the monetary amount will increase. The aggregate             
    amounts paid by the Group in respect of these transactions shall          
    not exceed HK$150 million for each of the three financial years           
    ending 31 December 2005, 31 December 2006 and 31 December 2007            
    respectively.                                                             
                                                                              
    Reasons for the transactions and the cap                                  
                                                                              
    Because of the close proximity of Sinopec Guangzhou Branch to             
    the Group and to its end users, it is more economical to engage           
    Sinopec Guangzhou Branch to refine and process crude oil for              
    the Group.