10:06 SAN MIGUEL HK<00236> - Announcement (2) Sales of packaged beer by the Group to the SMC Group 46,596 35,547 39,738 29,492 23,461 Payment of commission by the Group to the SMC Group in respect of sales of packaged beer by the Group directly to customers in certain countries (other than Hong Kong, Macau and the PRC) 834 906 316 524 485 The Group has been carrying on connected transactions with the SMC Group for many years in the usual and ordinary course of the Group's business. The Company had obtained a conditional waiver from the Stock Exchange from strict compliance with the disclosure requirements under the Old Listing Rules in respect of the Group's purchases of cans, bottles, crates and packaged beer from the SMC Group and the Group's sales of packaged beer to the SMC Group. Due to an inadvertent oversight, the Directors did not appreciate that following the coming into effect of the Revised Listing Rules on 31 March 2004, the Company could no longer rely on the waiver previously granted to it by the Stock Exchange. The purchase of crown seals by the Group from the SMC Group was not covered by the previous waiver granted by the Stock Exchange. Due to an oversight, the level of purchases of crown seals by the Group in 2001, 2002 and 2003 exceeded the de minimis threshold for disclosure under the Old Listing Rules and in 2004 exceeded the de minimis threshold under the Revised Listing Rules but were not disclosed. Based upon the value of the transactions carried out between the Group and the SMC Group for the period from 1 April 2004 to 31 December 2004, the Group's purchases of cans, crates and packaged beer each is subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 and the purchase of bottles by the Group from the SMC Group and the sales of packaged beer by the Group to the SMC Group is each subject also to the requirement for approval by Independent Shareholders under Rule 14A.35 of the Revised Listing Rules. As set out above, the amounts of commission paid to the SMC Group for the years 2001 to 2004 were each below the disclosure threshold of HK$1 million under the Old Listing Rules (for 2001 to 2003) and the Revised Listing Rules (for 2004). The Company is now taking appropriate steps to ensure compliance with the Revised Listing Rules as soon as practicable after becoming aware of its obligations under the Revised Listing Rules. The Stock Exchange reserves its rights to take appropriate actions against the Company and the Directors. THE AGREEMENT Pursuant to Chapter 14A of the Revised Listing Rules, in respect of non-exempt continuing connected transactions, the issuer must enter into a written agreement with the connected person for a period not more than three years and the issuer must set a maximum aggregate annual value for each connected transaction. In order to comply with the Revised Listing Rules, on 11 March 2005, the Company entered into the Agreement with SMC to govern the terms upon which the Continuing Connected Transactions will be carried out between members of the Group and members of the SMC Group. The Agreement will expire on 31 December 2007. Date 11 March 2005 Parties The Company and SMC Continuing Connected Transactions and the Caps Under the Agreement, the Group expects to enter into the following Continuing Connected Transactions. Each of the Continuing Connected Transactions is not expected to exceed the following Caps. 2005 2006 2007 HK$'000 HK$'000 HK$'000 Purchase of packaging materials (comprising cans, bottles, crown seals and crates) by the Group from the SMC Group 47,800 92,600 105,700 Purchase of packaged beer by the Group from the SMC Group 4,300 4,700 5,000 Sales of packaged beer by the Group to the SMC Group 46,100 53,600 60,700