09:28 CHINA MER HOLD<00144> - Announcement (4) a whole. As Euroasia is an indirect wholly-owned subsidiary of CMG, it is a connected person of the Company as defined under the Listing Rules. The principal business of Euroasia is the ownership and operation of dockyards. CMCS was acquired by the Group in January 2002. The rental paid by CMCS to Euroasia under the Euroasia Land Use Agreement for the years ended 31 December 2002, 2003 and 2004 are as follows: Year Rental (HK$) 2002 20,285,000 2003 20,285,000 2004 20,285,000 (based on unaudited management accounts) 5. Transactions with Yiu Lian CMCS entered into an agreement (the `Yiu Lian Land Use Agreement') with Yiu Lian on 8 November 2001 for the use by CMCS of certain properties owned by Yiu Lian in connection with the operation of the business of CMCS at Tsing Yi Terminal. Pursuant to a supplemental agreement entered into on 1 November 2004, the Yiu Lian Land Use Agreement has been amended to have a term of two years commencing on 1 November 2004. The rental payable by CMCS to Yiu Lian is approximately HK$5,589,000 per annum. For the purpose of Rule 14A.35(2) of the Listing Rules, the caps in respect of the rental to be paid by CMCS to Yiu Lian under the Yiu Lian Land Use Agreement are HK$5,589,000 for the year ending 31 December 2005 and HK4,658,000 for the 10-month period ending 31 October 2006 (calculated on a pro rate basis from 1 January 2006 to 31 October 2006 when the Yiu Lian Land Use Agreement will expire) respectively. In addition to the rental, CMCS will also be responsible for any additional government rates and land premium payable to the Hong Kong Government in respect of the properties. The rental payable by CMCS was negotiated on an arms-length basis based on the market value of the properties at the time of commencement of the Yiu Lian Land Use Agreement. The Directors, including the independent non-executive Directors, are of the view that the Yiu Lian Land Use Agreement has been entered into on normal commercial terms and in the ordinary and usual course of business of the Company and that the Yiu Lian Land Use Agreement is fair and reasonable and in the interests of the shareholders of the Company as a whole. As Yiu Lian is an indirect wholly-owned subsidiary of CMG, it is a connected person of the Company as defined under the Listing Rules. The principal business of Yiu Lian is the ownership and operation of dockyards. CMCS was acquired by the Group in January 2002. The amounts of rental paid by CMCS to Yiu Lian under the Yiu Lian Land Use Agreement for the years ended 31 December 2002, 2003 and 2004 are as follows: Year Rental (HK$) 2002 5,589,000 2003 5,589,000 2004 5,589,000 (based on unaudited management accounts) 6. Rental of Vessels from CMGW CMCS entered into a series of ship leasing agreements (the `CMGW Ship Leasing Agreements') with CMGW on 1 November 2004 for a term of one year commencing on 1 November 2004. Pursuant to the CMGW Ship Leasing Agreements, CMGW agrees to lease to CMCS the use of several vessels. As CMGW is an indirect wholly-owned subsidiary of CMG, it is a connected person of the Company as defined under the Listing Rules. The principal business of CMGW is the leasing of ships. The rental paid by CMCS are based on the depreciation charges of the vessels and were negotiated on an arms-length basis. The Directors, including the independent non-executive Directors, are of the view that the CMGW Ship Leasing Agreements have been entered into on normal commercial terms and in the ordinary and usual course of business of the Company and that the CMGW Ship Leasing Agreements are fair and reasonable and in the interests of the shareholders of the Company as a whole. CMCS was acquired by the Group in January 2002. The rental for leasing of ships paid by CMCS to CMGW for the years ended 31 December 2002, 2003 and 2004 are as follows: Year Rental (HK$) 2002 3,024,000 2003 3,024,000