Beijing Enterprises Water Group Limited — Proxy Solicitation & Information Statement 2007

May 4, 2007

SHANG HUA HOLDINGS

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SHANG HUA HOLDINGS LIMITED 上華控股有限公司[*]

(incorporated in Bermuda with limited liability)

(Stock Code: 371)

NOTICE OF THE SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the “ Special General Meeting ”) of Shang Hua Holdings Limited (the “ Company ”) will be held at Unit 1601, 16/F, Cosco Tower, No. 183 Queen’s Road Central, Sheung Wan, Hong Kong at 3:00 p.m. on Tuesday, 22 May 2007 for the purpose of considering and, if thought fit, passing the following ordinary resolution (with or without modification):

ORDINARY RESOLUTION

“ THAT

• (a) the creation and issue by the Company of the three-year zero coupon convertible bonds in the aggregate principal sums of HK$200 million (the “ Convertible Bonds ”) comprising Tranche 1 Convertible Bond and Tranche 2 Convertible Bond each of principal sum of HK$100 million (or portion or portions thereof), convertible into new shares ( “Shares” ) of nominal value HK$0.10 each in the capital of the “Company on the same terms and conditions (the “ Subscription Agreement ”) entered into on 12 April 2007 between the Company as issuer and Pioneer Wealth Limited as subscriber in Bonds Terms and Conditions ”) contained in Schedule I to a subscription agreement (the relation to the issue of and subscription for the Convertible Bonds (the “ Subscription ”) (a copy of the Subscription Agreement having been produced to this meeting and marked “A” and signed by the Chairman of this meeting for the purpose of identification) be and is hereby generally and unconditionally approved in all respects and the Subscription Agreement and the Subscription and all other transactions contemplated under the Subscription Agreement, be and are hereby generally and unconditionally ratified, confirmed and approved and further that the directors of the Company (the “ Directors ”) be and are hereby authorized to do all such further deeds, acts, matters and things, take all steps and execute further documents which in their opinion may be necessary, desirable or expedient for the purpose of giving effect to and/or to implement the transactions contemplated under the Subscription Agreement (including without limitation the issue of the correspondence numbers of the Convertible Bonds and in such denomination as the Directors determine); and

• (b) the Directors be and are hereby generally and specifically authorised to allot and issue such number of new Shares as may be required to be allotted and issued upon the exercise of the conversion right attaching to the Convertible Bonds (or to the extent necessary) on and subject to the Bonds Terms and Conditions (all capitalised terms are defined in part (a) of this resolution above).”

Yours faithfully, For and on behalf of the Board Zhou Liping Chairman

Hong Kong, 3 May 2007 Registered Office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Head office and principal place of business: Unit 1601, 16/F Cosco Tower No. 183 Queen’s Road Central Sheung Wan Hong Kong

As at the date of this notice of the Special General Meeting, the Board comprises three Executive Directors, namely, Ms. Zhou Liping, Ms. Guan Mei and Mr. Huang Flynn Xuxian and three Independent Non-executive Directors, namely, Messrs. Shea Chun Lok Quadrant, Chan Wai Kwong Peter and Ngai Chi Yung.

Notes:

1. A member entitled to attend and vote at the Special General Meeting is entitled to appoint not more than two proxies to attend and vote instead of him. In case of a recognised clearing house, it may authorise such person(s) as it thinks fit to act as its representative(s) at the Special General Meeting and vote in its instead. A proxy need not be a member of the Company.

2. In order to be valid, a proxy form, together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof, must be deposited at the Company’s branch share registrar in Hong Kong, Tengis Limited, located at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong not less than 48 hours before the time fixed for the holding of the Special General Meeting or any adjournment thereof. Completion and return of the proxy form will not preclude a member of the Company from attending and voting in person at the Special General Meeting and in such event, the proxy form shall be deemed to be revoked.

3. For identification purpose only

Please also refer to the published version of this announcement in China Daily.