09:31 SINO GOLF HOLD<00361> - Announcement (2) the SGM held on 7 August 2002. A waiver from strict compliance with the disclosure and independent Shareholders' approval requirements under Chapter 14 of the Listing Rules (this refers to the Listing Rules in force immediately prior to 31 March 2004) for the three financial years ending 31 March 2005 was granted by the Stock Exchange to the Company on 20 August 2002 in respect of such transactions. The total amount of revenue generated from the Continuing Connected Transactions for the nine months ended 31st December, 2002 and the two years ended 31st December, 2004 was approximately HK$21.1 million, HK$55.5 million and HK$19.4 million respectively, representing approximately 9.2%, 13.9% and 4.9% of the Group's total turnover. The Directors expect that the revenue from and payable by Nikko Bussan (Japan) to the Group under the Continuing Connected Transactions for each of the three years ending 31st December, 2007 will be higher than those of 2004 but will not exceed HK$30,000,000 for each relevant financial year. This expectation is founded on (i) the indications the Directors have received from Nikko Bussan (Japan) that potential and existing customers of Nikko Bussan (Japan) may place more orders for golf products manufactured by the Group; and (ii) the level of existing orders from Nikko Bussan (Japan). On the basis of the Directors' anticipation that the revenue from the Continuing Connected Transaction for each of the three years ended 31st December, 2007 will be higher than that of 2004 but will not exceed the amount of HK$30,000,000 for each of the financial years up to 31st December, 2007, the Company proposes that the cap amounts of the purchase of golf products by Nikko Bussan (Japan) under the Supply Agreement for each of the three financial years ended 31st December, 2007 will not exceed HK$30,000,000 in any financial year. II. Reason for the Continuing Connected Transactions The Directors consider that it would be: (i) burdensome administratively to have numerous agreements between Sino Golf Macau and Nikko Bussan (Japan); and (ii) too costly and impractical to make regular disclosure of each of the relevant transactions and obtain the prior approval from the independent Shareholders, where it is required under the Listing Rules. Hence, the Directors are of view that the Supply Agreements will not be prejudicial to the Shareholders and the Group as a whole since the benefits would be enhanced from both the perspective of the Shareholders and the Group. The Continuing Connected Transactions involve the sale by the Group of golf products to Nikko Bussan (Japan) which is owned as to 58.75% by Mr. Takanori Matsuura, a Director. Apart from Mr. Takanori Matsuura, there are 11 remaining shareholders of Nikko Bussan (Japan), many of whom are relatives of Mr. Takanori Matsuura. Nikko Bussan (Japan) and Mr. Takanori Matsuura are, therefore, connected persons of the Group with an interest in the Continuing Connected Transactions by virtue of the Listing Rules. The Continuing Connected Transactions are subject to reporting, announcement and independent Shareholders' approval requirements pursuant to Rule 14A.35 of the Listing Rules. The Directors, including the independent non-executive Directors, are of the view that Continuing Connected Transactions have been and will continue to be carried out on normal commercial terms, determined on an arm's length basis and in the ordinary and usual course of business of the Group. The Company will therefore seek the approval by the independent Shareholders of the Supply Agreement and the respective caps in relation to the Continuing Connected Transactions for a period of three financial years ending 31 December 2007 on the following conditions: (a) the Continuing Connected Transactions shall be: (i) entered into by the Group in the ordinary and usual course of its business; (ii) entered into on an arm's length basis, on normal commercial terms (which expression will be applied by reference to transactions of a similar nature and to be made by similar entities) and on terms no less favourable than terms available to or from independent third parties or (where there is no available comparison) on terms that are fair and reasonable so far as the shareholders of the Company taken as a whole are concerned; and (iii) carried out in accordance with the terms of the Supply Agreement; (b) disclosure shall be made in the Company's next and each successive annual report of the Continuing Connected Transactions containing those particulars specified in Rules 14A.45(l) to (5) of the Listing Rules together with a statement of the opinion of the