10:49 VITASOY INT'L<00345> - Announcement (1) The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. VITASOY INTERNATIONAL HOLDINGS LTD. (Incorporated in Hong Kong under the Companies Ordinance) (Stock Code: 0345) CONTINUING CONNECTED TRANSACTIONS The Company has been obtaining supply of milk products and milk processing and packaging services from Guangming under the Milk Supply Agreement in its ordinary and usual course of business. Guangming was and is a connected person of the Company under the Old Listing Rules and the Current Listing Rules respectively, as it owns 30% equity interest in Shenzhen Vitasoy, a subsidiary of the Company. On 4th February, 2003, the Stock Exchange granted a waiver to the Company waiving it from strict compliance with the announcement requirement for ongoing connected transactions under Rule 14.25(1) of the Old Listing Rules. As a result of the coming into effect of the Current Listing Rules on 31st March, 2004, the Transactions between the Company and Guangming constitute continuing connected transactions under Chapter 14A of the Current Listing Rules. Details of the Transactions for the financial year ended 31st March, 2005 will be disclosed in the Company's 2005 Annual Report. The Directors would also like to set a cap for the Transactions for the remaining term of the Milk Supply Agreement. BACKGROUND The Company announced on 30th January, 2003 that an application was made to the Stock Exchange for a waiver from strict compliance with further announcement obligation under Rule 14.25(1) of the Old Listing Rules in respect of the on-going nature of the Transactions under the Milk Supply Agreement. Pursuant to the Milk Supply Agreement which is of an initial term of three years from 14th March, 2003 to 13th March, 2006, Guangming would supply milk products and provide milk processing and packaging services to the Company. Guangming held 30% equity interest in Shenzhen Vitasoy, a subsidiary of the Company and was a connected person of the Company under the Old Listing Rules. On 4th February, 2003, the Stock Exchange granted a waiver to the Company waiving it from strict compliance with the obligation to publish further announcement as set out in Chapter 14 of the Old Listing Rules in connection with the Transactions on each occasion they arose. The Old Listing Rules were replaced by the Current Listing Rules with effect from 31st March, 2004. Under the Current Listing Rules, Guangming remains to be a connected person of the Company and the Transactions become continuing connected transactions under Chapter 14A of the Current Listing Rules. ANNUAL AMOUNT OF THE TRANSACTIONS Two financial years ended 31st March, 2005 Under the waiver granted by the Stock Exchange on 4th February, 2003, the cap amounts for the Transactions in any year should not exceed 3% of the Group's net tangible assets for that year. The unaudited aggregate value of the Transactions for the two financial years ended 31st March, 2005 were HK$3,517,000 and HK$3,054,000, respectively, both of which were within the annual cap allowed in the waiver granted by the Stock Exchange on 4th February, 2003 and gave rise to percentage ratios (other than the profits ratio) of less than 2.5% as calculated pursuant to Rule 14.07 of the Current Listing Rules. Details of the Transactions for the financial year ended 31st March, 2005 will be disclosed in the Company's 2005 Annual Report.