09:25 COSCO INTL HOLD<00517> - 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. COSCO International Holdings Limited (Incorporated in Bermuda with limited liability) (Stock Code: 0517) CONTINUING CONNECTED TRANSACTIONS WITH JAPAN KANSAI Summary The aggregate annual technology usage fees payable by the Kansai Companies to Japan Kansai for the year ended 31st December 2004 has exceeded the annual cap of HK$4,000,000 for the purpose of the continuing connected transaction waiver granted by the Stock Exchange. The aggregate annual technology usage fees payable for the year ended 31st December 2004 is approximately HK$5,780,000. The Company makes this announcement pursuant to the requirements Rule 14A.34 of the Listing Rules. Reference is made to the announcement of the Company dated 25th November 2003 and the circular of the Company dated 12th December 2003 (``Circular''). The Board hereby announce that the aggregate annual technology usage fees payable by Kansai Companies to Japan Kansai, for the year ended 31st December 2004 is approximately HK$5,780,000, which exceeded the annual cap of HK$4,000,000 for the year 2004 for the purpose of the continuing connected transaction waiver granted by the Stock Exchange on 18th February 2004. By virtue of Japan Kansai's more than 10% interests in Kansai Companies, Japan Kansai is a connected person of the Company. So far as the Board is aware, save as its interests in Kansai Companies, the Japan Kansai and its associates (as defined under the Listing Rules) have no interests in any shares of the Company or its subsidiaries. As disclosed in the Circular, the annual cap for the annual technology usage fees payable by Kansai Companies to Japan Kansai for each of the three years ending 31st December 2005 is HK$4,000,000. The aggregate fees payable for the year ended 31st December 2004 is less than 2.5% of the applicable percentage ratios under Rule 14A.34 of the Listing Rules. The Company therefore makes this announcement pursuant to the requirements under Rule 14A.34 of the Listing Rules. The management of the Company believes that the increased fees payable to Japan Kansai resulted from the surge of sales growth of the Kansai Companies in the year ended 31st December 2004, the year they become subsidiaries of the Company. The annual technology usage fees payable to Japan Kansai is derived from aggregating the sales amount of paints which is subject to paying such fees after deducting for goods return, customary quantity discounts, delivery charges, packaging charges, insurance costs and other relevant costs in accordance with the terms of the technology transfer contracts entered into by Kansai Companies and Japan Kansai. The Company provided its calculations on its continuing connected transactions (including those with Japan Kansai and its subsidiaries) for the year ended 31st December 2004 to its auditors for its review on 17th February 2005. During such review it became apparent that the Company had made inadvertent mistakes in calculating the amount of technology usage fees. In view of that the management of the Company became certain that the annual cap of the technology usage fees had been exceeded, the Company decided to issue this announcement. In order to avoid making similar mistakes in the future, the Company had sought guidance from its auditors as to the calculation method of the technology usage fees and will conduct monthly reviews on the amount of technology usage fees. The aggregate amounts payable by the Kansai Companies to Japan Kansai and its subsidiaries under all three types of the continuing connected transactions as disclosed in the Circular, namely (i) technology usage fees; (ii) the purchase of raw materials by the Kansai Companies from Japan Kansai and (iii) commission for the year ended 31st December 2004 were HK$14,280,000 which is less than 2.5% of the each of the relevant percentage ratios. Details of which are set out in the following table: