10:54     MEILAN AIRPORT<00357> - Announcement (4)                            

    2,076,000                                                                 
                                                                              
    The above historical figures are audited and contained in the relevant    
    annual and interim reports of the Company, which are within the caps      
    prescribed under the Existing Waivers.                                    
                                                                              
    New Annual Cap                                                            
                                                                              
    The Board has considered and resolved that the following new annual cap   
    be set for the annual volume of the relevant transaction for the period   
    from 1 January 2005 to 31 December 2007:                                  
                                                                              
       2007      2005      2006                                               
       ("RMB")                                                                
                                                                              
    Catering services by Hainan Food   2,400,000      3,050,000               
    4,000,000                                                                 
                                                                              
    Basis of the New Annual Cap                                               
                                                                              
    The proposed cap is determined with reference to the current contractual  
     price. The current contractual price is fixed without reference to the   
    historical figures due to the fact that the customers of Hainan Food      
    decreased substantially in 2004 since some of its major customers have    
    now retained their internal group member instead of Hainan Food to        
    provide the catering service and therefore, the fixed fee of              
    RMB4,380,000 per year for 2002 and 2003 is no longer a realistic          
    estimation of the profits of the relevant business for the future. The    
    new cap set for 2005 is based on estimation of the profits to be          
    generated in 2005, and it is estimated that there will be an increase in  
     the annual franchise fee of the relevant transaction by 30% each year    
    over the preceding year in 2006 and 2007.                                 
                                                                              
    Listing Rules Requirements                                                
                                                                              
    The terms and conditions of the agreement above have been negotiated on   
    an arm's length basis and are of normal commercial term. The relevant     
    transaction will be conducted in the ordinary and usual course of         
    business of the Company. The Board (including the independent             
    non-executive Directors) considers that the transaction above is fair     
    and reasonable, and is in the interests of the Company and the            
    Shareholders as a whole.                                                  
                                                                              
    As the relevant percentage ratios (other than profit ratio) in respect    
    of the transaction above are, on an annual basis, more than 2.5% but      
    less than 25% and the annual consideration of the transaction is less     
    than HK$10,000,000, the transaction is only subject to the reporting and  
     announcement requirements under the Listing Rules and no approval by     
    Independent Shareholders is required.                                     
                                                                              
    V.   Non-exempt Continuing Connected Transactions Subject To The          
    Independent Shareholders' Approval Requirements For The Years Of          
    2005-2007                                                                 
                                                                              
    (a)   Transactions with Hainan Airlines                                   
                                                                              
    (i)   Premises lease by Hainan Airlines                                   
                                                                              
    Terminal Lease                                                            
                                                                              
    Date of                                                                   
      Agreement:   5 January 2005                                             
                                                                              
    Parties:   The Company                                                    
       Hainan Airlines                                                        
                                                                              
    operation business. The Company has been leasing office and commercial    
    premises to Hainan Airlines for the latter's conduction of business at    
    Meilan Airport. According to the agreement, the premises leased at the    
    date of the agreement comprise office spaces, airport counters and other  
     premises at the airport terminal and apron.                              
                                                                              
    Price:   charges for the rentals are set at different rates depending on  
     the function and usage of those premises, which are applicable to all    
    other customers of the Company including independent third parties.       
    Those charge rates have been fixed by the Company by reference to         
    prevailing local market rates. The fixed monthly rental set out in the    
    agreement is RMB558,300, which is equivalent to RMB6,699,600 per year.    
                                                                              
    Term:   The lease agreement is for a term of three years commencing from  
     1 January 2005 and ending on 31 December 2007.                           
                                                                              
    Cargo Centre Lease