09:27 MIRAMAR HOTEL<00071> - Announcement (3) REASONS FOR THE CONTINUING CONNECTED TRANSACTION The Company has commenced operating two up-market restaurants serving Cantonese and Szechuan cuisine at the Premises since their soft opening on 6 February 2005 and the Directors (including independent non-executive Directors) are of the opinion that the ifc Mall, being a new landmark in Hong Kong and ideally located in the city center, would be an ideal location for the Company to expand its restaurant operation and to bring profits to the Group. The terms of the Confirmation of Sub-Lease were determined after arm's length negotiations between the parties and after making reference to the rents and other charges payable for similar premises in ifc Mall. The Directors (including independent non-executive Directors) are of the opinion that the Continuing Connected Transaction was entered into (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms after arm's length negotiations between the parties; and (iii) on terms that are fair and reasonable and in the interests of the Company and its shareholders as a whole. GENERAL The Company's principal activities consist of hotel business, food and beverage operations, travel operation and property business. The principal activities of Henderson Land Development Company Limited and its subsidiaries are property development, property leasing, finance, building construction, infrastructure business, hotel operation, department store operation, project management, property management and investment holding. As the Landlord is an associate of Henderson Land Development Company Limited, a substantial shareholder of the Company, it is a connected person of the Company under Rule 14A.11 of the Listing Rules and the entering into of the Confirmation of Sub-Lease constitutes a continuing connected transaction for the Company under Rule 14A.13 of the Listing Rules. The Continuing Connected Transaction will constitute a continuing connected transaction under Rule 14A.34 of the Listing Rules and details of the Continuing Connected Transaction will be subject to disclosure in an announcement and inclusion in the next published annual report and accounts of the Company under Rules 14A.45 to 14A.47 of the Listing Rules. The Company will also comply with the requirements under Rule 14A.37 to Rule 14A.41 of the Listing Rules in relation to the Continuing Connected Transaction during each of the three years ended 31 March 2005, 2006 and 2007. As the Continuing Connected Transaction, on an annual aggregate basis, does not exceed 2.5% of each of the applicable percentage ratios under the Listing Rules, no shareholders' approval is required. Upon the exercise by the Tenant of each of the 1st Option and the 2nd Option at the discretion of the Tenant to renew the sub-lease, the Company will comply with the relevant provisions in respect of continuing connected transaction and other relevant provisions in the Listing Rules, including re-calculating the size tests (where applicable) and making relevant disclosure in accordance with the Listing Rules (if so required). As at the date of this announcement, the Directors are Dr. Lee Shau Kee, Dr. David Sin Wai Kin*, Mr. Woo Kim Phoe, Mr. Patrick Fung Yuk Bun, Mr. Dominic Cheng Ka On, Mr. Richard Tang Yat Sun, Mr. Colin Lam Ko Yin, Mr. Eddie Lau Yum Chuen, Mr. Tony Ng, Mr. Norman Ho Hau Chong, Mr. Howard Yeung Ping Leung, Mr. Thomas Liang Cheung Biu, Mr. Lee Ka Shing, Mr. Wu King Cheong*, Mr. Alexander Au Siu Kee* and Mr. Peter Yu Tat Kong. * independent non-executive directors DEFINITIONS Unless otherwise defined, the following expressions have the following meanings in this announcement: `Company' Miramar Hotel and Investment Company, Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of Stock Exchange `Confirmation of Sub-Lease' a confirmation of sub-lease dated 8 February 2005 entered into between the Landlord and the Tenant `Continuing Connected the continuing connected Transaction' transaction entered into between the Landlord and the Tenant contemplated under the Confirmation of Sub-Lease `Directors' the directors of the Company `Gross Receipts' the gross amount of all sums billed or received in the