09:14 EGANAGOLDPFEIL<00048> - Announcement (2) For the period from 1 January 2004 to 31 December 2004, the aggregate value of the Lorica Transactions was approximately HK$25,568,221 (for the periods from 1 January 2004 to 31 March 2004 and from 1 April 2004 to 31 December 2004, the respective aggregate values of the Lorica Transactions were approximately HK$7,446,090 and HK$18,122,131) and the amount of the percentage ratios as calculated pursuant to Rule 14.07 of the Listing Rules is less than 2.5%. For the twelve months ended 31 December 2004, the Lorica Transactions constituted continuing connected transactions under Rule 14A.34 of the Listing Rules which was only subject to the reporting and announcement requirements. Details of the Lorica Transactions has been disclosed in the Company's published annual report and accounts for the year ended 31 May 2004 under Rule 14A.46 of the Listing Rules. The Directors proposed to set the cap amount for the Lorica Transactions at HK$38,000,000 (the `Annual Cap') for a period from 1 January 2005 up to 31 December 2006, the table below shown the detailed information about the Annual Cap the Company proposed to be complied with for the relevant periods up to 31 December 2006:- For the period from 1 January HK$15,833,333 2005 to 31 May 2005 For the financial year ending HK$38,000,000 31 May 2006 For the period from 1 June HK$22,166,667 2006 to 31 December 2006 For the period from 1 January 2005 to 31 December 2006, as each of the percentage ratios is on an annual basis less than 2.5%, the Lorica Transactions constituted as a Continuing Connected Transactions under Rules 14A.34 of the Listing Rules which is only subject to the reporting and announcement requirements and is exempt from the independent shareholders' approval requirements. Details of the Lorica Transactions will be disclosed in the Company's 2005, 2006 and 2007 Annual Reports accordingly. The Annual Cap has been determined by reference to the value of the transactions for the year ended 31 May 2004 and the global market conditions on luxury products in the coming years. As the global economic conditions especially in the Asia markets continue to recover and show sign of growing, the Company expects that the global demand for our leather goods products for the coming years will have 30% increase. The Company will comply with the requirements under Rule 14A.36 of the Listing Rules if the aggregate value of the transactions during each of the three financial years ending 31 May 2007 exceeds the Annual Cap or the consideration ratio calculated pursuant to Rule 14.07 of the Listing Rules exceeds 2.5%. REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS The Lorica Transactions arises from the joint venture entered by the Group and Kuraray group for furtherance of man-made leather business in Europe whereby Kuraray group shall supply the Raw Materials to the Group for manufacture and Lorica shall distribute the Finished Products under trademarks in Europe on an exclusive basis. The Directors consider that the arrangement with Kuraray group provides the Group with a reliable supply of quality products which only a very limited number of suppliers in the world can meet and the transactions with Kuraray group are in line with the Group's strategy of expanding its leather business. The continuing connected transactions are of a recurring nature, and have been conducted in the ordinary and usual course of the business of the Group on normal commercial terms. The Directors including the independent non-executive directors of the Company consider that the Lorica Transactions: (i) have been entered in the ordinary and usual course of business of the Group, on normal commercial terms, are fair and reasonable and in the interests of the Shareholders as a whole; and (ii) are either on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable than terms available to or from (as appropriate) independent third parties. Definitions `Company' EganaGoldpfeil (Holdings) Limited, the securities of which are listed on the Stock Exchange `Directors' the directors of the Company `Finished Products' Full grain-type or suede-type man-made leather manufactured from the Raw Materials