10:02 MENGNIU DAIRY<02319> - Announcement (13) In the first quarter of 2005, the amount of such transaction has already reached RMB3,000,000. The amount for each of the second and third quarter of 2005 is expected to double when compared with that of the first quarter, as these periods are the peak seasons of yogurt sales. (b) Estimated Annual Figures Based on the estimated growth in sales for the new and existing yogurt products, the maximum aggregate annual amount for this category of transaction has been revised to for the years ended 31 December 2005 and 2006, respectively, RMB20,000,000 and RMB48,000,000. Pursuant to Rule 14A.25 of the Listing Rules and as requested by the Stock Exchange, the proposed restated caps in respect of these inventory adjustment transactions as mentioned in this paragraph 4(B) would have to be aggregated with the proposed caps in respect of the inventory adjustment transactions as set out under paragraph 2(D) to this announcement. Such aggregation would result in each of the applicable percentage ratios (other than the profits ratio) for the inventory adjustment transactions being greater than 2.5%. Hence, these transactions constitute continuing connected transactions under Rule 14A.35 of the Listing Rules and are subject to reporting and announcement requirements and will require independent shareholders' approval and must comply with requirements set out in Rules 14A.45 to 14A.48 of the Listing Rules. INDEPENDENT SHAREHOLDERS' APPROVAL Pursuant to the Listing Rules, the transactions contemplated under paragraphs 2(A), 2(C), 2(D), 2(E), 2(F), 3 and 4(B) above are subject to Independent Shareholders' approval by poll. A circular containing, inter alia, details of the terms of each respective agreement, the restated caps in relation to the continuing connected transaction as mentioned in paragraph 4(B) to this announcement, the recommendation from the Independent Board Committee, the letter of advice from the independent financial adviser of the Independent Board Committee and the notice of the AGM will be despatched to the Shareholders no later than 21 days from this announcement. The Listing Rules also require that details of these transactions be disclosed in the Company next published annual report and accounts in accordance with the requirement of Listing Rule 14A.45. An Independent Board Committee, comprising independent non-executive directors Mr Wang Huaibao, Mr Zhang Julin and Mr Li Jianxin has been formed to advise independent shareholders of the above transactions subject to the independent shareholders' approval. Watterson Asia Limited, an independent financial adviser, has been appointed to advise the Independent Board Committee in relation to the Mengniu Maanshan Intra-Group Transactions (in respect of those transactions whereby the applicable percentage ratios (other than the profits ratio) exceed 2.5% only), the Guarantee Agreements and the continuing connected transaction as mentioned in paragraph 4(B) to this announcement. GENERAL The Group is a dairy product manufacturer in China and the principal product categories are liquid milk products, such as UHT milk, yogurt and milk beverages, ice cream and other dairy products such as milk powder and milk tablets. DEFINITIONS The following defined terms used in this announcement shall have the following meanings: ``AGM'' means the annual general meeting of the Company to be held on Tuesday, 28 June 2005; ``Board'' means the board of the Directors; ``Company'' means China Mengniu Dairy Company Limited (HKex code 2319), a company incorporated with limited liability in the Cayman Islands on 16 February 2004, the shares of which are listed on the main board of the Stock Exchange; ``Directors'' means the directors of the Company;