09:57 PICO FAR EAST<00752> - Announcement (2) 0.1% but less than 2.5%, the Transactions will be subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Listing Rules. Notwithstanding that the Transactions do not require approval of the Independent Shareholders pursuant to Rule 14A.34 of the Listing Rules, the Company is adopting a higher standard of corporate governance than that required by the Listing Rules and Chongqing Nanping will only enter into the Management Agreement if the Independent Shareholders approve the Management Agreement. The Company will despatch to its Shareholders a circular containing details of the Management Agreement and a letter of advice from the IFA regarding the duration of the Management Agreement together with a notice convening the EGM. The Transactions will also be subject to the annual review requirements under Rules 14A.37 to 14A.40 of the Listing Rules, and the reporting requirements under Rules 14A.45 and 14A.46 of the Listing Rules. If the aggregate annual amounts payable to CCCIC under the Management Agreement exceed the Caps or when the Management Agreement is renewed or there is a material change to the terms of the Management Agreement, the Company will have to comply with the then Listing Rules requirements pursuant to Rule 14A.36 of the Listing Rules. THE MANAGEMENT AGREEMENT Date : to be entered into during May 2005 following and subject to the approval of Independent Shareholders at the EGM. Parties : 1. Chongqing Nanping : 2. CCCIC Chongqing Nanping is owned as to 70% by Pico AsiaPacific, a wholly-owned subsidiary of the Company, and as to 30% by CCCIC. CCCIC is a state owned enterprise under the Chongqing city government and is principally engaged in infra-structure developments in Chongqing city, the PRC. Save for being a 30% equity owner of Chongqing Nanping, to the best knowledge, information and belief of the Directors having made all reasonable enquiry, CCCIC is a third party independent of the Company, its subsidiaries and their respective connected persons. Particulars of the Management Agreement Chongqing Nanping Pursuant to the Management Agreement, Chongqing Nanping will manage the daily operation of the Centre at its discretion (including, among other things, promoting the use of the Centre and renting out space and facilities of the Centre). Chongqing Nanping will be responsible for renting the exhibition and conference space and other facilities of the Centre. The relevant rental will be directly payable by the users of the Centre to Chongqing Nanping and will be recorded as turnover of Chongqing Nanping. If any connected persons of the Company use the Centre during the term of the Management Agreement, such transaction will constitute a connected transaction for the Company and the Company will comply with the then relevant requirements of the Listing Rules. The Centre is located at the Nanping district of Chongqing city and is wholly-owned by CCCIC. The Centre is scheduled to open in the last quarter of 2005 and will have an indoor exhibition area of approximately 45,000 square metres and an outdoor area of approximately 10,000 square metres besides other convention facilities such as banquet rooms, restaurants and conference facilities. Duration of the Management Agreement The Management Agreement will be effective from the date of the agreement. Subject to Independent Shareholders' approval, the Management Agreement is expected to be entered into during May 2005, following the EGM, and will expire on 31 December 2015. Once executed, the Management Agreement will not be subject to any condition precedent. Chongqing Nanping was established on 20 January 2005 in the PRC for the purpose of undertaking the management of the Centre. Chongqing Nanping is responsible for carrying out the business of renting the conference and exhibition space and other facilities of the Centre. As the Centre is newly established, it will take a period of time for Chongqing Nanping to build up the Centre's reputation and clientele. It is essential that Chongqing Nanping is able to secure a long-term contractual relationship with CCCIC for the management of the Centre after considering the initial necessary start-up work (such as heavy marketing expenses and other start-up expenses to be spent during initial years) and the expected growth in utilization and income of the Centre which usually gives bigger rewards to the hall manager in latter years. The Directors are also of the view, based on their experience in managing exhibition centres in Colombo and Ho Chi Minh City, that from a commercial perspective, a long term management agreement is necessary in order to ensure (i) continuity of marketing of the exhibition hall (which the Directors consider to be a vital component to the success of