11:49 CHINA EAST AIR<00670> - Announcement (3) (i) current liabilities amounting to approximately RMB4,971,075,000, including short-term bank loans, accounts payable, notes payable, receipts in advance, current portion of long-term liabilities, provisions, other payables and accrued expenses; and (ii) long-term liabilities amounting to approximately RMB4,049,754,000, including long-term bank loans, finance lease obligations, accrued aircraft overhaul expenses, post-retirement benefit obligations, deferred income and other long-term payables. An independent valuation as of 31st December, 2004 of the assets and liabilities to be acquired under the Proposed Acquisition was conducted by * (China Consultants of Accounting and Financial Management Co. Ltd.) primarily by way of cost replacement method. * (China Consultants of Accounting and Financial Management Co. Ltd.), not being a connected person of the Company, is an independent PRC valuer qualified to carry out the valuation, and has experience in conducting asset valuations involving aviation and transportation projects. The valuation results have been approved by the State-owned Assets Supervision and Administration Commission of the PRC State Council in early May 2005. According to such valuation, as of 31st December, 2004, the appraised value of the aggregate assets to be acquired under the Proposed Acquisition was RMB9,541,892,400 (equivalent to approximately HK$9,001,785,283) and that of the aggregate liabilities to be acquired was RMB8,556,199,600 (equivalent to approximately HK$8,071,886,415), and thus the appraised value of the aggregate net assets was RMB985,692,800 (equivalent to approximately HK$929,898,868). The aggregate (loss)/profit, before taxation, attributable to the aviation businesses of CEA Northwest and CEA Yunnan to be acquired by the Company under the Proposed Acquisition for the two financial years ended 31st December, 2003 and 2004 was RMB(1,344,037,000) (equivalent to approximately HK$(1,267,960,000)) and RMB182,308,000 (equivalent to approximately HK$171,990,000), respectively. The aggregate (loss)/profit, after taxation, attributable to such businesses for the two financial years ended 31st December, 2003 and 2004 was RMB(1,251,193,000) (equivalent to approximately HK$(1,180,370,000)) and RMB166,740,000 (equivalent to approximately HK$157,300,000), respectively. (There were no extraordinary items attributable to the aviation businesses of CEA Northwest and CEA Yunnan for the two financial years ended 31st December, 2003 and 2004.) Certain assets and liabilities being retained by CEA Northwest and CEA Yunnan Nonetheless, following completion of the Proposed Acquisition, certain businesses, assets and liabilities which are not related or are otherwise ancillary or peripheral to the civil aviation businesses of CEA Northwest and CEA Yunnan will not be transferred to the Company under the Acquisition Agreement, but will be retained by CEA Northwest and CEA Yunnan. These retained assets and liabilities include those relating to the provision of media and advertising, catering, and hotel and accommodation services, and related ancillary businesses, and certain assets and liabilities which are peripheral to the relevant civil aviation businesses (for example, land prepayments, certain buildings and construction in progress). In addition, in respect of the liabilities associated with the aviation businesses of CEA Northwest and CEA Yunnan, except for those described above and itemised in the Acquisition Agreement, all other liabilities (including, for example, contingent liabilities, and deferred tax liabilities occasioned before the Effective Date) of CEA Northwest and CEA Yunnan will not be transferred to the Company under the Acquisition Agreement, and will continue to be borne and assumed by CEA Holding, CEA Northwest and/or CEA Yunnan (as the case may be). Further, under the Acquisition Agreement, any compensation or indemnity as may arise or result from the Proposed Acquisition, or as occasioned before the Effective Date in connection with the relevant assets and liabilities being acquired thereunder, shall also be borne by the CEA Holding, CEA Northwest and/or CEA Yunnan. Consideration and payment terms The Proposed Acquisition was negotiated and entered into on an arm's length basis and on normal commercial terms.