10:49     VITASOY INT'L<00345> - Announcement (2)                             

    Cap for the financial year ending 31st March, 2006                        
    The Directors propose to set the amount of HK$4,000,000 as                
    a cap amount for the Transactions for the financial year                  
    ending 31st March, 2006 (the "2006 Cap"). The 2006 Cap has                
    been determined by reference to the value of the                          
    Transactions for the year ended 31st March, 2005 and the                  
    management's view on the market condition of milk supply                  
    and milk processing and packaging services in the                         
    forthcoming financial year.                                               
                                                                              
    REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED                      
    TRANSACTIONS                                                              
    The Transactions arise from the long term business                        
    relationship with Guangming. The Directors consider that                  
    the Milk Supply Agreement would provide the Group with a                  
    reliable supply of milk products, which is important and                  
    beneficial to the Company and the Shareholders as a whole.                
                                                                              
    The Transactions are of a recurring nature and the Directors,             
    including the independent non-executive Directors,                        
    consider that the Transactions:                                           
                                                                              
    (i)   have been entered in the ordinary and usual course                  
    of business of the Company and in accordance with the terms               
    of the Milk Supply Agreement;                                             
                                                                              
    (ii)   are on normal commercial terms and are fair and                    
    reasonable and in the interest of the Shareholders as a                   
    whole; and                                                                
                                                                              
    (iii)   are either on normal commercial terms, or if there                
    are not sufficient comparable transactions to judge whether               
    they are on normal commercial terms, on terms no less                     
    favourable than terms available to or from (as appropriate)               
    independent third parties.                                                
                                                                              
    GENERAL                                                                   
    As the percentage ratios (other than the profits ratio)                   
    calculated according to Rule 14.07 of the Current Listing                 
    Rules using the 2006 Cap are on an annual basis less than                 
    2.5%, the Transactions will constitute continuing                         
    connected transactions under Rule 14A.34(1) of the Current                
    Listing Rules, which are only subject to the reporting and                
    announcement requirement and are exempt from the                          
    independent Shareholders' approval requirement. Details of                
    the Transactions for the financial year ending 31st March,                
    2006 will be disclosed in the Company's 2006 Annual Report.               
                                                                              
    If at any point in time the actual aggregate value of the                 
    Transactions under the Milk Supply Agreement for the period               
    1st April, 2005 to 13th March, 2006 (the expiry date of the               
    Milk Supply Agreement) exceeds the 2006 Cap, the Company                  
    will re-comply with the requirements of the Current Listing               
    Rules.                                                                    
                                                                              
    The principal business activities of the Company are the                  
    manufacture and sale of food and beverages.                               
                                                                              
    Guangming is a PRC company and its principal business                     
    activities are the manufacture and sale of dairy products,                
    development of biotechnology and high technological                       
    husbandry, tourism and engagement in industrial activities.               
                                                                              
    DEFINITIONS                                                               
    As used in this announcement, the following words and                     
    phrases have the following meaning:                                       
                                                                              
    "Company"   Vitasoy International Holdings Limited, a                     
    company incorporated in Hong Kong with limited liability                  
    whose shares are listed on the Stock Exchange                             
                                                                              
    "Current Listing    Rules Governing the Listing of                        
    Securities on                                                             
      Rules"   The Stock Exchange of Hong Kong Limited                        
    effective as of 31st March, 2004                                          
                                                                              
    "Directors"   directors of the Company                                    
                                                                              
    "Group"   the Company and its subsidiaries                                
                                                                              
    "Guangming"   *(Shenzhen Guang Ming                                       
    Holdings Limited), a company incorporated in the PRC                      
                                                                              
    "Hong Kong"   Hong Kong Special Administrative Region of                  
    the People's Republic of China                                            
                                                                              
    "HK$"   Hong Kong dollars, the lawful currency of Hong Kong