09:17 GREAT WALL AUTO<02333> - Announcement (4) services by instalments upon completion of each respective stage of the construction projects and will continue to do so. Upon its listing in December 2003, the Company was granted a waiver by the Stock Exchange from strict compliance with the relevant requirements of the Listing Rules for continuing connected transactions not exceeding RMB35,000,000, RMB35,000,000 and RMB10,000,000, respectively, for the connected transactions between Baoding Tai Hang and the Company for the three years ending 31 December 2005. No similar framework agreement for the years ended 31 December 2002, 2003 and 2004 were entered into. The aggregate transaction amounts between the Company and Baoding Tai Hang for the three years ended 31 December 2004 are as follows: 31 December (RMB) 2002 2003 2004 15,282,000 34,512,000 34,848,000 INFORMATION OF THE PARTIES INVOLVED The Company is an integrated automobile manufacturer and together with its subsidiaries, the Group also engages in the production and sales of certain automotive parts and components. Zhong Ke Huabei is a company engaged in the production and sale of passenger cars and automotive parts and also the maintenance of automobiles and Tianqi Meiya is a company engaged in the design, development, production, sale of automobiles (except small passenger cars) and automotive parts, and also the maintenance and repair of automobiles. Baoding Tai Hang is a company engaged in steel frame engineering and the construction and installation of steel structures. Each of Zhong Ke Huabei, Tianqi Meiya and Baoding Tai Hang is a connected person (as defined under the Listing Rules) of the Company but are otherwise independent of each other. Although the Company, Tianqi Meiya and Zhong Ke Huabei are automobile producers, the Company does not consider Tianqi Meiya and Zhong Ke Huabei as competitors as their products are sold to customers with lower consumption power at lower prices which are different from the Company's target customers. REASONS FOR THE TRANSACTIONS The Directors (including the independent non-executive Directors) are of the view that the transactions contemplated under each of the Zhong Ke Huabei Agreement, the Tianqi Agreement and the Baoding Tai Hang Agreement is fair and reasonable and in the interests of the Company and its shareholders as a whole and in the ordinary and usual course of business of the Company and the terms of the Agreements are on normal commercial terms. The Zhong Ke Huabei Agreement and the Tianqi Agreement will further enhance the revenue generated by and the use of automobile components produced by the Group in other automobiles. The caps of RMB50 million and RMB64 million for the Zhong Ke Huabei Agreement and the Tianqi Agreement, respectively, are arrived based on the Zhong Ke Huabei's and Tianqi Meiya's respective estimates of the nature and quantity of automobile components that may be required by each of them, respectively, for the year 2005. The Baoding Tai Hang Agreement will provide quality assurance to the Company and its subsidiaries as the Company has previously engaged Baoding Tai Hang for its design and construction services prior to the Company's listing on the Stock Exchange. The cap of RMB25 million is arrived at based on the estimation derived from the current construction services provided by Baoding Tai Hang and the size and scale of the estimated facility and auxiliary facilities required to be built in accordance with the business development plan of the Company for the year ending 31 December 2005. The Company confirms that, save as to their relationship with the Company as disclosed above, to the best of the Director's knowledge, information and belief, having made all reasonable enquiries, Zhong Ke Huabei, Tianqi Meiya and Baoding Tai Hang and their respective ultimate beneficial owners are Independent Third Parties. CONTINUING CONNECTED TRANSACTIONS The transactions contemplated under each Agreement constitute continuing connected transactions of the Company under Rule 14A.34 of the Listing Rules and each of the applicable percentage ratios (other than the profits ratio) is on an annual basis less than 2.5%. In the event that the cap amount in any of the Agreement is exceeded or