Beijing Enterprises Holdings Limited — Proxy Solicitation & Information Statement 2003

Jul 30, 2003

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, 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 circular.

If you are in doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold all your shares in China Chengtong Development Group Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

CHINA CHENGTONG DEVELOPMENT GROUP LIMITED 中國誠通發展集團有限公司

(incorporated in Hong Kong with limited liability)

Executive Directors: Zhang Guotong (Vice Chairman) Li Tiefeng (Managing Director) Gu Laiyun (Finance Director) Wu Chun Wah

Registered Office: Room 1302, 13/F., MassMutual Tower, 38 Gloucester Road, Wanchai, Hong Kong.

Non-Executive Directors:

Ma Zhengwu (Chairman) Hong Shuikun Chen Shengjie

Independent Non-Executive Directors:

Tsui Yiu Wa, Alec Kwong Che Keung, Gordon Lao Youan

28 July 2003

Dear Shareholder(s),

GENERAL MANDATES TO ISSUE NEW SHARES AND REPURCHASE SHARES

INTRODUCTION

At the last annual general meeting of China Chengtong Development Group Limited (“Company”) (formerly known as China Logistics Group Limited) held on 30 December 2002, a general mandate was granted to directors of the Company (“Directors”) to allot, issue and deal with additional shares of

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HK$0.10 each in the capital of the Company (“Shares”). This general mandate will lapse at the conclusion of the forthcoming annual general meeting (“2003 Annual General Meeting”) to be held at 10:30 a.m. on 26 September 2003 at Rooms 2903-2907, 29th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong or on revocation or variation of approval of granting such mandate by an ordinary resolution of shareholders of the Company, whichever is the earlier.

It is therefore proposed to seek your approval at the 2003 Annual General Meeting to grant to the Directors general mandate to allot, issue and deal with additional Shares up to a maximum of 20% of the issued share capital of the Company as at the date of the 2003 Annual General Meeting (the “Share Issue Mandate”).

The Directors also propose to seek your approval at the 2003 Annual General Meeting to grant to the Directors general mandates to (i) repurchase on the Stock Exchange of Hong Kong Limited (the “Stock Exchange”) the Shares up to a maximum of 10% of the issued share capital of the Company as at the date of the 2003 Annual General Meeting (“the Repurchase Mandate”); and (ii) to extend the Share Issue Mandate by adding those Shares that may be repurchased under the Repurchase Mandate (the “Extension of Share Issue Mandate”) of the Company.

This circular contains the explanatory statement in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”) to give all the information reasonably necessary to enable shareholders to make an informed decision on whether to vote for or against the above resolutions.

GENERAL MANDATE TO ISSUE SHARES

Should the Share Issue Mandate be granted at the 2003 Annual General Meeting and on the assumption that the number of Shares in issue as at 28 July 2003, being the latest practicable date prior to the printing of this circular (the “Latest Practicable Date”) remains unchanged prior to the date of the 2003 Annual General Meeting, the Directors are empowered to issue a maximum of 336,990,993 new Shares being 20% of the issued share capital of the Company, otherwise than pursuant to (i) a rights issue; or (ii) an exercise of rights of subscription or conversion under the terms of any warrant or other securities issued by the Company; or (iii) an exercise of subscription rights under any share option scheme of the Company, during the period up to the conclusion of the next following annual general meeting of the Company unless it is otherwise revoked or varied by a resolution of the members of the Company.

GENERAL MANDATE TO REPURCHASE OF SHARES

The following is an explanatory statement as required by Rule 10.06 of the Listing Rules to provide requisite information to you for your consideration of the proposal to authorize the Directors to exercise the power of the Company to repurchase Shares up to a maximum of 10% of the issued share capital.

(1) Repurchase Mandate

At the 2003 Annual General Meeting, an ordinary resolution will be proposed that the Directors be given a general and unconditional mandate to exercise all powers of the Company to repurchase issued and fully paid Shares. Under such mandate, the maximum number of Shares that the Company may

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repurchase shall not exceed 10% of the issued share capital of the Company as at the date of the passing of the relevant resolution. The Company’s authority is restricted to purchases made on the Stock Exchange in accordance with the Listing Rules.

On the Latest Practicable Date, there were in issue an aggregate of 1,684,954,968 Shares. Subject to the passing of the Repurchase Mandate and on the assumption that no additional Shares will be issued prior to the date of passing the Repurchase Mandate, the Company will be allowed under the mandate to repurchase a maximum of 168,495,496 Shares being 10 per cent of the issued share capital of the Company during the period up to the conclusion of the next following annual general meeting of the Company is required by law to be held, or the revocation or valuation of the approval granted under the Repurchase Mandate by an ordinary resolution of the shareholders of the Company in general meeting, whichever is the earlier. The mandate allows the Company to make or agree to make repurchases only during the period ending on the earliest of (a) the date of the next annual general meeting, (b) the date by which the next annual general meeting of the Company is required to be held by law or the articles of association of the Company or (c) the date upon which such authority is revoked or varied by an ordinary resolution of the shareholders in a general meeting of the Company.

The Directors have no present intention to repurchase any Shares but consider that the mandate granted under the Repurchase Mandate will provide the Company the flexibility to make such repurchase when appropriate and beneficial to the Company. Such repurchases may, depending on market conditions and funding arrangements, enhance the net asset value of the Company and/or earnings per Share. The director would only make such purchases in circumstances whereby they consider them to be in the best interests of the Company. As compared with the financial position of the Company as at 31 March 2003 (being the date of its latest audited accounts), the Directors consider that there would not be a material adverse impact on the working capital and on the gearing position of the Company in the event that the proposed repurchases were to be carried out in full during the proposed repurchase period. No repurchase would be made in circumstances that would have a material adverse impact on the working capital or gearing ratio of the Company.

(2) Funding of Repurchases

The Company is empowered by its memorandum and articles of association to repurchase its Shares. In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its articles of association and the Laws of Hong Kong. The Directors envisaged that the funds required for any repurchase would be derived from the distributable profits of the Company and/or the proceeds of a new issue of shares made for the purpose of the repurchase to such extent allowable under the Companies Ordinance (Chapter 32) of the Laws of Hong Kong.

(3) Directors, their associates and connected persons

None of the Directors nor, to the best of the knowledge and belief of the Directors having made all reasonable enquire, any of their associates (as defined in the Listing Rules) has any present intention, in the event that the grant to the Directors of a repurchase mandate is approved by shareholders, to sell Shares to the Company.

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No connected person (as defined in the Listing Rules) of the Company has notified the Company that he/she has a present intention to sell Shares to the Company nor has he/she undertaken not to sell any of the Shares held by him/her to the Company in the event that the Company is authorised to make repurchases of Shares. In accordance with the Listing Rules, the Company shall not knowingly purchase shares from a connected person on the Stock Exchange.

(4) Effects of the Takeovers Code

A repurchase of Shares by the Company may result in an increase in the proportionate interests of a substantial shareholder of the Company in the voting rights of the Company, which could give rise to an obligation to make a mandatory offer in accordance with Rule 26 of the Hong Kong Code on Takeovers and Mergers (the “Code”).

As at the Latest Practicable Date, by virtue of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), China Chengtong Holdings Company (“China Chengtong”) is beneficially interested in 608,201,500 Shares, representing approximately 36.10% of the issued share capital of the Company and was the only substantial shareholder holding more than 10% of the issued share capital of the Company. In the event that the Directors should exercise in full the power to repurchase Shares which is proposed to be granted pursuant to the Repurchase Mandate, the shareholding of China Chengtong and its associates, in the Company would be increased to approximately 40.11% of the issued share capital of the Company and such increase may give rise to an obligation to make a mandatory offer under Rule 26 and 32 of the Code. The Directors have no present intention to exercise the mandate granted under the Repurchase Mandate to such an extent as would give rise to such obligation.

(5) Undertaking of the directors

The Directors have undertaken to the Stock Exchange to exercise the power of the Company to make repurchases pursuant to the proposed resolution in accordance with the Listing Rules and the Laws of Hong Kong, and in accordance with the regulations set out in the memorandum and articles of association of the Company.

(6) Purchases of Shares made by the Company

During the six months preceding the date of this letter, no securities have been repurchased by the Company.

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(7) Market Prices

During each of the previous twelve months, the highest and lowest traded prices for Shares on the Stock Exchange were as follows:

		Per Share
Month	Highest	Lowest
	HK$	HK$
2002
July	0.255_(Note)_
August	0.255_(Note)_
September		0.255_(Note)_
October	0.255_(Note)_
November	0.255_(Note)_
December	0.142	0.081
2003
January	0.147	0.110
February	0.201	0.121
March	0.221	0.152
April	0.205	0.172
May	0.197	0.182
June	0.200	0.168

Note: At the request of the Company, dealings in the Shares on the Stock Exchange were suspended from 28 May 2002 up to 6 December 2002. The Share price of HK$0.255 from June to November 2002 is the closing price of the Shares on 27 May 2002.

EXTENSION OF SHARE ISSUE MANDATE

Subject to the passing at the 2003 Annual General Meeting of the proposed resolutions regarding the Shares Issue Mandate, Repurchase Mandate and the Extension of Share Issue Mandate, the Directors will be given a general mandate to add all those number of the Shares which may from time to time be purchased under the mandate granted under the Repurchase Mandate to the Shares Issue Mandate. Thus the limit of the Shares Issue Mandate would include, in addition to the 20% limit as aforesaid, the number of the Shares that may be purchased under the Repurchase Mandate.

ANNUAL GENERAL MEETING

The notice convening the 2003 Annual General Meeting is set out in the Company’s annual report for 2003. A form of proxy for use at the 2003 Annual General Meeting and the annual report for 2003 are being sent to the shareholders together with this circular. Whether or not you are able to attend the 2003 Annual General Meeting, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the share registrar of the Company, Computershare Hong Kong Investor Services Limited at Rooms 1901-5, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Completion and delivery of the form of proxy will not preclude you from attending and voting at the 2003 Annual General Meeting if you so wish.

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RECOMMENDATION

The Directors consider that the proposals contained in this circular are in the best interests of the Company and its shareholders and accordingly recommend you to vote in favour of the resolutions to be proposed at the 2003 Annual General Meeting.

Yours faithfully, Ma Zhengwu Chairman

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