10:07     ANHUI CONCH<00914> - Announcement (2)                               

    Pricing basis and payment                                                 
                                                                              
    Both the Company and Ningchang Packing covenanted that the sale and       
    purchase of cement packaging bags would be determined by the relevant     
    parties after arm's length negotiation based on the principle of          
    fairness and reasonableness and on normal commercial terms and with       
    reference to fair market prices at the relevant times. Ningchang          
    Packing has undertaken that members of the Ningchang Group would          
    sell the cement packaging bags to members of the Group pursuant to        
    the Purchasing Agreement on the terms and conditions not less             
    favourable than or more favourable than they would sell to                
    independent third parties from time to time. Under the Purchasing         
    Agreement, after inspection of the cement packaging bags received         
    and the relevant members of the Group satisfy with their qualities,       
    the Group will pay to the relevant members of Ningchang Group for         
    the amount due in the form of cash or bank acceptance bill before         
    the 20th day of each month.                                               
                                                                              
    Term                                                                      
                                                                              
    The Purchasing Agreement is for a term of 1 year commencing from 1        
    January 2005 to 31 December 2005.                                         
                                                                              
    CAPS FOR THE CONTINUING CONNECTED TRANSACTIONS                            
                                                                              
    The following table sets out the historical transaction amounts for       
    the purchases of cement packaging bags from members of the Ningchang      
    Group which have been disclosed in the annual reports of the Company      
    for the two years ended 31 December 2004 and the expected capped          
    amount for the year ending 31 December 2005:                              
                                                                              
    Year ended / ending 31 December                                           
                                                                              
    Transaction/Expected transaction amount(RMB)                              
                                                                              
    2003                                                                      
    111.74 million (equivalent to approximately HK$105.42 million)            
                                                                              
    2004                                                                      
    223.09 million (equivalent to approximately HK$210.46 million)            
                                                                              
    2005                                                                      
    200 million (equivalent to approximately HK$188.68 million)               
                                                                              
    The above expected capped amount for the year ending 31 December          
    2005 is ascertained by reference to the historical transactions           
    records up to 2004 and the expected sales of cement by the Group          
    for the year ending 31 December 2005.                                     
                                                                              
    REASONS FOR THE CONTINUING CONNECTED TRANSACTIONS                         
                                                                              
    The Group is principally engaged in the production and sale of            
    cement and commodity clinker. The principal business carried on           
    by members of the Ningchang Group is the production and sale of           
    self-produced cement packaging bags and the processing of plastic         
    products.                                                                 
                                                                              
    The Group purchases cement packaging bags from members of the             
    Ningchang Group because part of the cement produced by the Group          
    requires packaging in bags before sale to customers. In order to          
    facilitate unified administration of the "Conch" brand, to enjoy          
    the production scale of Ningchang Group and to reduce the                 
    procurement costs, the Group has been purchasing cement packaging         
    bags from the Ningchang Group since 1997.                                 
                                                                              
    The Continuing Connected Transactions are and will be conducted           
    in the ordinary and usual course of business of the Group. The            
    Directors (including the independent non-executive Directors)             
    consider that the terms of the Continuing Connected Transactions          
    are fair and reasonable and in the best interest of the Company           
    and its shareholders as a whole.                                          
                                                                              
    REPORTING AND DISCLOSURE REQUIREMENTS                                     
                                                                              
    Ningchang Packing, Yingde Company and Wuhu Company are                    
    subsidiaries of Conch Holdings, the controlling shareholder of            
    the Company. Accordingly, each of Ningchang Packing, Yingde               
    Company and Wuhu Company is a connected person of the Company             
    and the Continuing Connected Transactions constitute continuing           
    connected transactions for the Company under Chapter 14A of               
    the Listing Rules.