RNS Number:6150O
Pokphand (C.P.) Co Ltd
13 August 2003


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.


                             C.P. Pokphand Co. Ltd.

                (Incorporated in Bermuda with limited liability)


                             CONNECTED TRANSACTION

                                       

Hainan CTAH, a wholly-owned subsidiary of the Company, has entered into the
Lease, pursuant to which CP (Hainan) has leased the Fixed Assets from Hainan
CTAH for a term of five years expiring on 10th August, 2008.

Seven directors of the Company together own aggregate shareholding interests of
56.85% in CPG, CPG and its associates own an approximately 49.35% shareholding
interest in CP Foods. CP (Hainan), the tenant under the Lease, is a wholly-owned
subsidiary of CP Foods. CP Foods is a company listed on the Securities Exchange
of Thailand. Because of the seven Directors' 56.85% interests in CPG, CPG is a
connected person of the Company and CP (Hainan) is regarded as an associate of
CPG for Listing Rules purposes. Accordingly, the Lease entered into between
Hainan CTAH and CP (Hainan) constitutes a connected transaction for the Company
under the Listing Rules.

As, in the opinion of the Directors (including the independent non-executive
Directors), the Lease contains normal commercial terms and as the total rental
over the entire term of the Lease represents less than 3% of the consolidated
net tangible assets of the Company as disclosed in its latest published
consolidated accounts, the Lease is required to be disclosed by way of a press
announcement and certain details of the Lease are required to be included in the
Company's future published annual reports and accounts under rule 14.25(1) of
the Listing Rules but the Lease is not subject to the approval of independent
shareholders of the Company.



CONNECTED TRANSACTION

Hainan CTAH, a wholly-owned subsidiary of the Company, is the landlord under the
Lease, pursuant to which CP (Hainan) has leased the Fixed Assets from Hainan
CTAH for a term of five years expiring on 10th August, 2008.


Seven Directors, namely Mr. Jaran Chiaravanont, Mr. Montri Jiaravanont, Mr.
Dhanin Chearavanont, Mr. Sumet Jiaravanon, Mr. Prasert Poongkumarn, Mr. Min
Tieanworn, and Mr. Thirayut Phitya-Isarakul, together own aggregate shareholding
interests of 56.85% in CPG. Apart from the 56.85% shareholding interests owned
by the seven Directors, the remaining shareholdings in CPG are owned by persons
who are not connected with any of the substantial shareholders, chief executives
and directors of the Company or any of its subsidiaries or any of their
respective associates. CPG and its associates own an approximately 49.35%
shareholding interest in CP Foods. CP (Hainan), the tenant under the Lease, is a
wholly-owned subsidiary of CP Foods. CP Foods is a company listed on the
Securities Exchange of Thailand. Because of the above-named Directors' 56.85%
interests in CPG, CPG is a connected person of the Company and CP (Hainan) is
regarded as an associate of CPG for Listing Rules purposes. Accordingly the
Lease entered into between Hainan CTAH and CP (Hainan) constitutes a connected
transaction for the Company under the Listing Rules.


As at the date hereof, Mr. Jaran Chiaravanont is beneficially interested in
843,750 shares of the Company, representing approximately 0.04% of the issued
share capital of the Company and Mr. Dhanin Chearavanont and Mr. Sumet
Jiaravanon are deemed, for the purposes of the Securities and Futures Ordinance,
to be interested in the same 1,066,662,834 shares of the Company, representing
approximately 49.42% of the issued share capital of the Company.


As, in the opinion of the Directors (including the independent non-executive
Directors), the Lease contains normal commercial terms and as the total rental
over the entire term of the Lease represents less than 3% of the consolidated
net tangible assets of the Company as disclosed in its latest published
consolidated accounts, the Lease is required to be disclosed by way of a press
announcement and certain details of the Lease are required to be included in the
Company's future published annual reports and accounts under rule 14.25(1) of
the Listing Rules, but the Lease is not subject to the approval of independent
shareholders of the Company.


LEASE DATED 8TH AUGUST, 2003 (the "Lease")

The Landlord:Hainan CTAH

The Tenant:CP (Hainan)

Fixed Assets: The production facilities situated at Laocheng Development Zone,
Chengmai County, Hainan Province, the PRC including all plants and machinery
located thereon. The Fixed Assets were previously used by Hainan CTAH for the
production of animal feeds.


Term: Five years commencing from 11th August, 2003 and expiring on 10th August,
2008 (both days inclusive). There is no provision for automatic renewal or any
right to require automatic renewal by any party.


Rental: During the term of the Lease, the aggregate amount of
rental per year will be RMB5,060,000 (approximately HK$4,760,000 on the basis of
the exchange rate of HK$1=RMB1.062) payable by CP (Hainan) to Hainan CTAH yearly
in advance in cash.


The rental amount is approximately equal to the rental value of the Fixed Assets
as assessed in a valuation report prepared by an independent firm of accountants
in Hainan, the PRC, which taking into account the losses sustained by Hainan
CTAH in recent years, adopted the principle that the rental value would generate
sufficient income to set off all depreciation charges attributed to the Fixed
Assets in the accounts of Hainan CTAH. In such valuation report, the annual
rental value of the Fixed Assets for a period of five years was valued at
RMB5,060,249.20. Hainan CTAH and the Company have been applying the
straight-line method of depreciation for the Fixed Assets in accordance with the
PRC Accounting Standards and the International Accounting Standards. Such
accounting method has been disclosed in the Group's consolidated accounts for
the financial years ended 31st December, 2001 and 2002. The Lease will be
accounted for as an operating lease in the financial statements of the Group.


Employees: According to the terms of the Lease, all present employees of Hainan
CTAH will be re-employed by CP (Hainan). No severance payment will be borne by
the Group as a result of such re-employment.


REASON FOR ENTERING INTO THE LEASE

The principal reason for Hainan CTAH to enter into the Lease is that, as Hainan
CTAH has experienced operating losses of approximately RMB3.54 million (audited)
and approximately RMB1.68 million (audited) for the financial years ended 31st
December, 2001 and 2002 respectively, and approximately RMB1.42 million
(unaudited) for the six months ended 30th June, 2003, by ceasing its previous
production at the Fixed Assets and renting it out to a third party, the Lease
will provide a stable income for Hainan CTAH during the term of the Lease
sufficient to set off against the expected depreciation charges attributed to
the Fixed Assets in the accounts of Hainan CTAH, so as to ensure that Hainan
CTAH will not incur further losses. The net asset value of Hainan CTAH as at
31st December, 2002 was RMB29.41 million.


The Directors (including the independent non-executive Directors) are of the
view that the terms of the Lease are fair and reasonable based on normal
commercial terms and for Hainan CTAH to enter into the Lease is in the best
interests of the Company and its shareholders as a whole. The seven Directors
who are deemed to be interested in the transaction in the manner described
above, namely Mr. Jaran Chiaravanont, Mr. Montri Jiaravanont, Mr. Dhanin
Chearavanont, Mr. Sumet Jiaravanon, Mr. Prasert Poongkumarn, Mr. Min Tieanworn,
and Mr. Thirayut Phitya-Isarakul, had abstained from voting on the relevant
board resolution approving the Lease.


The feedmill previously operated by Hainan CTAH at the Fixed Assets was one of
the more than seventy feedmills operated by the Group in the PRC. Apart from the
Fixed Assets, Hainan CTAH has no other material assets. Since the total tonnage
of feeds (including animal and aqua feeds) sold by Hainan CTAH represented only
approximately 1.13%, 1.07% and 1.09% of the total tonnage of feeds (including
animal and aqua feeds) sold under the management of the Group for the financial
years ended 31st December, 2001 and 2002 and for the six months ended 30th June,
2003 respectively, the Directors (including the independent non-executive
Directors) are of the view that the leasing of the Fixed Assets will not have a
substantial adverse impact on the existing operation of the Group.


INFORMATION ON THE COMPANY AND THE PARTIES TO THE CONNECTED TRANSACTION

The Company's principal business is investment holding and its subsidiaries,
jointly-controlled entities and associates are principally engaged in the
trading of agricultural products, feedmill and poultry operations, the
manufacturing and sale of motorcycles and accessories for automotives and
property and investment holding.


The principal business of Hainan CTAH is the production and sale of animal feeds
in the PRC. The principal business of CPG is investment holding and the
principal business of CP (Hainan) is the production and sale of aqua feeds in
the PRC.


DEFINITION

In this announcement, the following expressions have the meanings set out below
unless the context requires otherwise:


"associates" as defined in the Listing Rules


"Board"  the board of directors of the Company

"Company"  C.P. Pokphand Co. Ltd., a company incorporated in Bermuda, the shares
of which are listed on the main board of the Stock Exchange and The London Stock
Exchange Limited


"CP Foods"  Charoen Pokphand Foods Public Company Limited, a company incorporated
in Thailand, the shares of which are listed on the Securities Exchange of
Thailand


"CPG"  Charoen Pokphand Group Co., Ltd., a company incorporated in Thailand


"CP (Hainan)"  C.P. Aquaculture (Hainan) Co., Ltd., a wholly-owned subsidiary of
CP Foods incorporated in the PRC


"Directors"  directors of the Company


"Fixed Assets"  the production facilities situated at Laocheng Development Zone,
Chengmai County, Hainan Province, the PRC including all plants and machinery
located thereon


"Hainan CTAH"  Hainan Chia Tai Animal Husbandry Co., Ltd., a wholly-owned
subsidiary of the Company incorporated in the PRC


"Lease"  the lease dated 8th August, 2003 entered into between Hainan CTAH and CP
(Hainan)


"HK$"  Hong Kong dollars, the lawful currency of Hong Kong Special Administrative
Region


"Listing Rules"  the Rules Governing the Listing of Securities on the Stock
Exchange


"PRC"  the People's Republic of China


"RMB"  Renminbi, the lawful currency of the PRC


"Stock Exchange"  The Stock Exchange of Hong Kong Limited


                            By Order of the Board of
                             C.P. Pokphand Co. Ltd.
                              Dhanin Chearavanont
                      Chairman and Chief Executive Officer

Hong Kong, 12th August, 2003





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