Chia Hsin Cement Greater China Holding Corporation, incorporated in the Cayman Islands, announces that in accordance with the provisions on termination in the Supply Agreement, both Jingyang Cement Co (JCC) and CHC agreed to terminate the Supply Agreement on 4 March 2005. JCC, an indirectly wholly owned subsidiary of the Company which is also a wholly foreign owned enterprise, and CHC, the ultimate controlling shareholder of the Company, entered into the Supply Agreement pursuant to which CHC agrees to purchase from JCC certain type of cement in bulk at a fixed price agreed between the parties and which shall be reviewed quarterly by both parties.
Prior to the Supply Agreement becoming unconditional, in view of the change of the cement market condition and the intensive competition in the cement market, CHC and the Company negotiated and concluded that JCC should enter into a cancellation agreement with CHC to terminate the Supply Agreement and such cancellation agreement was entered into between these parties on 4 March 2005. Although the entering into of the Supply Agreement could broaden the Group’s sources of income, after the termination of the Supply Agreement, the Group will continue to maintain its business relationship with its existing customers and explore further overseas market customers to be included in its sales portfolio. The Board therefore considers that the termination of the Supply Agreement will not adversely affect the sources of the income of the Company.