09:39 DONGFANG ELEC<01072> - Announcement (4) negotiated on normal commercial terms no less favourable to the Group than those available from independent third parties. IV. Impact on the Company and purpose of the continuing connected transactions The Continuing Connected Transactions will be conducted in the ordinary course of business of the Company with product prices determined according to the prevailing market prices. The Continuing Connected Transactions are beneficial for the Company's steady operation and cost reduction incentive as the costs of raw materials supplied in bulk would be reduced, which is in line with the development strategy and sustainable growth of the Company without causing detriment to the interests of the Company and other shareholders, especially those of the minority shareholders. V. Approval of the continuing connected transactions at the Board of the Company 1. The Company convened the 16th meeting of the fourth session of the board of directors on 21 March 2005, at which the Directors connected with the Connected Persons abstained from voting while other Directors voted. Eleven directors attended the meeting and the aggregate amount of the 2004 Connected Transactions were noted and proposal for the Continuing Connected Transactions was considered and approved. The Directors also resolved that Independent Shareholders' approval of the 2004 Connected Transactions and the Continuing Connected Transactions at the general meeting be proposed and an independent financial adviser be appointed to advise the Independent Board Committee and independent shareholders of the Company, on whether the terms and conditions of the Continuing Connected Transactions are fair and reasonable so far as the Independent Shareholders are concerned and whether the connected transactions are in the interests of the Company and the shareholders as a whole. The independent financial adviser will also advise on whether the relevant caps set for the Continuing Connected Transactions are fair and reasonable. Apart from the Chairman Mr. Zhu Yuanchao and director Mr. Jin Jiachuan, who hold positions in DFEW and abstained from voting pursuant to relevant requirements in the SEHK Listing Rules and SSE Listing Rules, all other nine directors voted for the above approvals. 2. Prior approval of independent directors and their independent opinions regarding the approval of proposing the 2004 Connected Transactions and the Continuing Connected Transactions to be approved at the shareholders' meeting The independent directors of the Company agreed to submit the proposals for approving the Continuing Connected Transactions at the shareholders' meeting to the 16th meeting of the fourth session Board for consideration, and, expressed their independent opinion regarding the board approval procedures as follows: "The decision-making procedures at the board meeting for the continuing connected transactions are in compliance with the abstaining requirement for connected directors as set out in the Rules Governing the Listing of Securities on Shanghai Securities Exchange and the Articles of Association of the Company. Pricing principle for the continuing connected transactions is reasonable and without causing detriment to the interests of the Company, other shareholders and especially those with minority interests. Subject to the opinions of the independent financial adviser, the continuing connected transactions are beneficial for the Company's steady operation and cost reduction incentive, which is line with the development strategy and sustainable growth of the Company. As the amount of above continuing connected transactions accounts for a small proportion of the Company's total procurement, the impact on the profit of the Company is insignificant." 3. The "SSE Listing Rules" and the "SEHK Listing Rules" requirements In accordance with the PRC Accounting Standards, 5% of the Company's audited net assets as at 31 December 2004 was RMB63,500,000 based on its total net assets of RMB1,270 million, and therefore the aggregate amount anticipated for the Continuing Connected Transactions exceeds the threshold under which the transactions can be approved by the Board alone. The Continuing Connected Transactions are therefore subject to the approval of the general meeting of the Company pursuant to the SSE Listing Rules. The cap of the aggregate consideration of the Continuing Connected Transactions are anticipated to exceed 2.5% of the relevant percentage ratios under the SEHK Listing Rules and the Connected Transactions are subject to the announcement, reporting and shareholder approval requirements under the SEHK Listing Rules. The board of directors proposed that the Continuing Connected Transactions shall require Independent Shareholders' approval in a