Beijing Urban Construction Design & Development Group Co., Limited — M&A Activity 2005

Jun 6, 2005

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.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities.

(incorporated in Hong Kong with limited liability)

(Stock Code: 688)

MAJOR AND CONNECTED TRANSACTION

The Disposal

On 3 June 2005, CSCIHL, COHL and COLI entered into the Sale and Purchase Agreement pursuant to which CSCIHL will acquire the entire issued share capital of Zetson, the holding company of the Project Management Group, from COLI, representing COLI’s entire interest in the Project Management Group for a consideration of HK$788,088,757, which will be satisfied by COHL transferring to COLI the Consideration Shares. The Board proposed that subject to Completion, a special dividend will be declared to be paid in the form of a distribution in specie of the Consideration Shares to the Shareholders. The Consideration Shares to be distributed to the Shareholders will be listed on the Main Board of the Stock Exchange.

COHL is the controlling shareholder of COLI and CSCIHL is an associate of COHL. The Disposal would constitute a major and connected transaction for COLI subject to the approval of the Independent Shareholders by way of poll.

General

An independent board committee comprising the independent non-executive directors of COLI has been appointed to consider the Disposal. Access Capital has been appointed the independent financial adviser to advise the independent board committee of COLI and the Independent Shareholders in respect of the terms of the Disposal.

A circular containing, among other things, further details of the Disposal, the Distribution, a detail timetable and the recommendation of the independent board committee of COLI in respect of the Disposal, the advice of Access Capital in respect of the Disposal and the notice convening the Extraordinary General Meeting will be despatched to the Shareholders as soon as practicable.

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The Disposal may or may not proceed. The listing of, and permission to deal in, the CSCIHL Shares will be subject to approval from the Stock Exchange and there is no assurance that the listing approval will be granted. Shareholders and potential investors of COLI should exercise caution when dealing in Shares.

Reference is made to the announcements of COLI dated 19 January 2004 and 25 June 2004 respectively.

The Board announced on 19 January 2004 and 25 June 2004 respectively that it was considering the possibility of combining all or part of COLI’s construction-related business with those of COHL in a new entity with a possible separate listing of the new entity on the Stock Exchange by way of introduction to be followed by a special dividend in kind of COLI’s interest in such new entity to the Shareholders.

CSCIHL was incorporated in the Cayman Islands as that new entity and a wholly-owned subsidiary of COHL on 25 March 2004. CSCIHL has informed COLI that a formal application has been submitted by CSCIHL to the Stock Exchange on 14 March 2005 for the listing of, and permission to deal in the CSCIHL Shares on the Main Board of the Stock Exchange.

COHL is the controlling shareholder of COLI, which is interested in about 51% of COLI’s issued share capital as at the date of this announcement, and CSCIHL is an associate of COHL, and hence each of COHL and CSCIHL is a connected person of COLI under the Listing Rules.

THE SALE AND PURCHASE AGREEMENT

Date

3 June 2005

Parties

Purchaser: CSCIHL Vendor: COLI Covenantor: COHL

Assets

One share of US$1.00 each in the capital of Zetson, representing the entire issued share capital of Zetson as at the date of this announcement and COLI’s entire interest in Zetson. Following Completion, Zetson will cease to be a subsidiary of COLI and after the Distribution, COLI will no longer hold any interest in Zetson.

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Zetson was valued at approximately HK$788 million as at the date of the Sale and Purchase Agreement, based on the adjusted net profit of the Project Management Group for the year ended 31 December 2004 of about HK$75.3 million and a corresponding adjustment of certain management fee paid by the Project Management Group to COLI in the amount of approximately HK$12.2 million and a price-earnings ratio of 9 times.

Consideration

The consideration is a sum of HK$788,088,757. In consideration of COLI agreeing to sell the Sale Share to CSCIHL, CSCIHL agrees to procure COHL to settle the consideration and COHL agrees to settle the same by way of transfer to COLI on Completion the Consideration Shares for distribution to COLI’s Shareholders, which will represent approximately 72.63% of the enlarged issued share capital of CSCIHL upon the Listing.

The entire issued share capital of CSCIHL before the Disposal is valued at approximately HK$1,085 million based on the net profit of CSCIHL of about HK$61.2 million for the year ended 31 December 2004, a price-earnings ratio of 9 times and the amount of HK$534 million as consideration to be received by CSCIHL from COHL for the disposal of the Property Interest Companies to COHL.

The purchase price for the Sale Share was determined by COLI and CSCIHL after arm’s length negotiations with reference to the valuation level of comparable companies, the net asset value of the Project Management Group, the prospect of the Project Management Group and the strategic value and synergies to be obtained as a result of the combination of the CSCIHL Group and the Project Management Group, and the Directors believe that the terms of the transaction are fair and reasonable and are in the interests of the Shareholders as a whole.

Conditions

Completion of the Sale and Purchase Agreement is conditional upon:

• (a) the Independent Shareholders approving the Sale and Purchase Agreement and the transactions contemplated thereunder, the Distribution and such other matter as may be required by the Stock Exchange to be subject to the approval of any shareholders of COLI at the Extraordinary General Meeting in accordance with the Listing Rules and as required by the Stock Exchange;

• (b) the issue of the Listing Document by CSCIHL and if such Listing Document is issued as a prospectus as defined under the Companies Ordinance, the registration of the Listing Document as a prospectus with the Companies Registrar in Hong Kong; and

• (c) COLI obtaining of such confirmation from the relevant bankers to the effect that such guarantees, indemnities or such other commitments provided by COLI in favour of such bankers in support of facilities maintained by members of the Enlarged CSCIHL Group be released and the terms of such underlying facilities be amended accordingly, on terms reasonably acceptable to the CSCIHL and as may be considered desirable by CSCIHL for the purpose of the Listing.

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CSCIHL may at any time waive any of the above conditions (other than (a) and (c)) on such terms as it may decide.

If any of the conditions (which have not been waived by CSCIHL) have not been satisfied on or before 31 December 2005 or such other later date as the parties may agree, then CSCIHL may on that date, at its option by notice to COLI:

• (i) waive the above conditions (other than (a) and (c)) which have not been satisfied;

• (ii) postpone Completion to a date (being a Business Day) falling not more than 90 Business Days after 31 December 2005 (or such later date as the parties may agree) provided that CSCIHL may not postpone Completion more than once without the consent of COLI; or

• (iii) terminate the Sale and Purchase Agreement upon which all rights and obligations shall cease immediately.

Completion should take place within 5 days following satisfaction or waiver of all the conditions to the Disposal (or such other date as COLI and CSCIHL may agree in writing) and is scheduled to take place before 30 June 2005.

Other terms

Zetson, being the holding company of the Project Management Group, will repay the Loan to COLI prior to Completion.

COLI will give a non-competition undertaking in favour of CSCIHL upon completion of the Disposal that it will itself not and will procure none of its subsidiaries will engage in the construction market in Hong Kong, Dubai and India, provided that such undertaking shall not prevent COLI from investing in any securities of a company listed on the stock exchange provided that the COLI Group in aggregate is not beneficially interested in 10% or more of the issued securities of any class of such company.

The above undertaking will terminate upon the earliest of the following: (a) the securities of CSCIHL ceasing to be listed on the Stock Exchange; (b) the Enlarged CSCIHL Group ceasing to carry on construction business or the construction business ceasing to be a major business of the Enlarged CSCIHL Group; and (c) COLI ceasing to be a fellow subsidiary through the ultimate shareholding held by CSCEC.

The Distribution

The Board has resolved that, subject to approval of the Shareholders of the Distribution and Completion, a special dividend will be declared to be paid in the form of a distribution in specie of the Consideration Shares, representing approximately 72.63% of the enlarged issued share capital of CSCIHL upon the Listing, to the Shareholders whose names appear in the register of members of COLI at the close of business on the Record Date. The Consideration Shares to be distributed will be listed on the Main Board of the Stock Exchange.

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The Distribution has not been and will not be registered under any securities legislation of any jurisdiction (except that the Listing Document will be registered in Hong Kong under the Companies Ordinance). The Shareholders whose address as shown on the register of members of COLI at the close of business on the Record Date who is outside Hong Kong will not receive any of the CSCIHL Shares but arrangement will be made for such shares which would otherwise have been distributed to such Shareholders to be sold in the market after dealing commences. Any net proceeds of sale, after deduction of expenses, will be distributed to such Shareholders in Hong Kong dollars at their own risk, unless the amount falling to be distributed to any such Shareholder is less than HK$100, in which case it will be retained for the benefit of COLI.

Pursuant to the Distribution, a total of 357,409,867 CSCIHL Shares, equivalent to approximately 72.63% of the enlarged share capital of CSCIHL prior to the date of commencement of dealings in the CSCIHL Shares on the Stock Exchange, will be distributed to the Shareholders as at the Record Date on the basis of 1 CSCIHL Share for every 18 Shares held. The number of CSCIHL Shares to be distributed to each Shareholder may not be an integral multiple of a full board lot of 2,000 CSCIHL Shares and dealings in odd lots of CSCIHL Shares may be below their prevailing market price. Entitlements of the Shareholders as a result of the Distribution will be rounded down to the closest whole number if required, and the fractional Shares will be sold for the benefit of COLI.

Odd lot arrangement

HSBC Securities Asia Limited has been appointed by CSCIHL to provide matching services to the holders of CSCIHL Shares who wish to dispose of or top up their odd lots of CSCIHL Shares to full board lots of 2,000 CSCIHL Shares at their own cost. Holders of CSCIHL Shares who wish to take advantage of this arrangement should contact Mr. Thomas Ngai Kwok Kan at telephone number 2996-6992 at HSBC Securities Asia Limited, L16 HSBC Main Building, 1 Queen’s Road Central, Hong Kong at any time within 14 days after the date of commencement of dealings in the CSCIHL Shares on the Stock Exchange. Holders of the CSCIHL Shares in need for the matching services after 14 days after the commencement of dealings in the CSCIHL Shares on the Stock Exchange will have to arrange for their own matching services. Holders of the CSCIHL Shares in odd lots should note that successful matching of the sale and purchase of odd lots CSCIHL Shares is not guaranteed. Holders of CSCIHL Shares are recommended to consult their own professional advisers if they are in any doubt of the above arrangement.

Certificates for the CSCIHL Shares will be issued in board lots of 2,000 CSCIHL Shares except for those entitlements which are less than a full board lot, and will be posted to the registered addresses of the holders of the CSCIHL Shares by ordinary mail at their own risks.

The Project Management Group and CSCIHL

The Project Management Group is the construction arm of the COLI Group engaged in construction operations in Hong Kong and in implementing construction projects of COLI and for CSCEHK (a subsidiary of CSCIHL) as project manager under the Project Management Agreement. The Project Management Group comprises Zetson and its subsidiaries, including China Overseas Building Construction Limited, China Overseas Civil

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Engineering Limited and China Overseas Foundation Engineering Limited. Upon Completion, Zetson will cease to be a subsidiary of COLI and the Project Management Group will no longer form part of the COLI Group but will be held under CSCIHL. CSCIHL was incorporated in the Cayman Islands on 25 March 2004 as the new entity to hold the combined construction-related business of COLI and COHL. Upon completion of the reorganisation of CSCIHL in preparation of the Listing, the principal subsidiary of CSCIHL will be CSCEHK, which is principally engaged in construction business in Hong Kong, including building construction and civil engineering works.

Pursuant to the corporate reorganisation of CSCIHL in preparation for the Listing, CSCIHL will go through a reorganisation pursuant to which CSCIHL will become the holding company of the Track Record Group, involving, amongst others, the disposal of CSCEHK’s entire interests in the Property Interest Companies, the acquisition of the IP Holding Companies by CSCIHL, and the merger of CSCEHK into CSCIHL. In addition, in order to re-integrate the Project Management Group into the Track Record Group to form the Enlarged CSCIHL Group, CSCIHL has entered into the Sale and Purchase Agreement with COLI in relation the acquisition of the Project Management Group.

The consolidated net profit before and after taxation and extraordinary items of the Project Management Group was approximately HK$88.8 million and approximately HK$75.3 million respectively for the financial year ended 31 December 2004. The consolidated net profit before and after taxation and extraordinary items of the Project Management Group was approximately HK$57.3 million and HK$51.0 million respectively for the financial year ended 31 December 2003. The consolidated net asset value of the Project Management Group as at 31 December 2004 was approximately HK$388.2 million.

The combined net profit before and after taxation and extraordinary items of the CSCIHL Group was approximately HK$77.3 million and approximately HK$61.2 million respectively for the financial year ended 31 December 2004. The combined net profit before and after taxation and extraordinary items of the CSCIHL Group was approximately HK$65.1 million and HK$55.2 million respectively for the financial year ended 31 December 2003. The combined net asset value of the CSCIHL Group as at 31 December 2004 was approximately HK$991.1 million.

The Project Management Agreement will be terminated upon the Listing.

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Group and shareholding structure of COLI and CSCIHL before and after Completion

The chart below shows the intended structure of COLI and CSCIHL before Completion:

==> picture [272 x 147] intentionally omitted <==

----- Start of picture text -----

COHL
100% about 51%
CSCIHL COLI
100% 100% 100%
Construction-related the Project the Remaining
business Management Group COLI Group
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The chart below shows the shareholding structure of COLI and the Enlarged CSCIHL Group after Completion and immediately after the Listing:

==> picture [273 x 210] intentionally omitted <==

----- Start of picture text -----

CSCEC
Independent
COHL
Shareholders
35.73% 64.27%
about 51%
CSCIHL COLI
100%
100%
Construction-related the Project the Remaining
business Management Group COLI Group
----- End of picture text -----

REASON FOR AND BENEFIT OF THE DISPOSAL

COLI is principally engaged in property development and investment, building and civil construction, foundation engineering and project management, infrastructure project investments, real estate agency and management and treasury operations.

It is intended that, upon completion of the Disposal and upon the Listing, CSCIHL will become the flagship of CSCEC’s construction business in Hong Kong. In addition, the Independent Shareholders will, through the Distribution, be able to participate in CSCIHL.

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The Disposal will not have any adverse effect on the financial position of COLI. It is presently intended that following Completion, CSCIHL will be principally engaged in building construction and civil engineering works in Hong Kong and the principal activities of the Remaining COLI Group will continue to be focused on property development and investment, and infrastructure project investment in Hong Kong and the PRC.

The Disposal, upon Completion, would result in a clear delineation of the business between the CSCIHL Group and the Remaining COLI Group. Under a separate and distinct platform, the businesses of the Enlarged CSCIHL Group and the Remaining COLI Group may further grow with more focused development and strategic planning of their respective operations and resources.

Subject to the final audit by the auditors of COLI, the Directors do not expect any material gain or loss on COLI as a result of the Disposal.

The Directors are of the view that the Disposal may allow the COLI Group’s construction business to enjoy stronger and better growth in merging with its parent company’s construction business, which all the Shareholders are able to participate directly by way of taking ownership in CSCIHL by virtue of the Distribution and COLI receiving the Consideration Shares in lieu of cash under the Disposal.

PROPOSED LISTING OF COP

COLI announced on 28 September 2004 that COP, a 79% owned subsidiary of COLI which is principally engaged in property development and investment in Beijing, Shenzhen, Changchun and Nanjing in the PRC, has filed an application for the listing of its shares on the Shanghai Stock Exchange A-Share Market on even date.

Upon receipt of the listing permission from the CSRC and other relevant PRC authorities, it is proposed that COP will offer its shares as A-shares for subscription in the PRC. It is expected that COP will remain a subsidiary of COLI upon completion of its share offer on the Shanghai Stock Exchange A-Share Market.

The proposed listing of COP is still subject to the approval of the CSRC and other regulatory authorities and the requisite time for obtaining such approvals may take up to 1 year. It is therefore uncertain whether the proposed listing of COP will materialise.

The listing of COP will proceed in the event that the relevant requirements under Practice Note 15 of the Listing Rules are complied with.

GENERAL

Under the Listing Rules, the Disposal would constitute a major and connected transaction for COLI and will be subject to the approval of the Independent Shareholders by poll at the Extraordinary General Meeting.

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An independent board committee comprising the independent non-executive Directors has been appointed to consider the Disposal. Access Capital has been appointed the independent financial adviser to advise the independent board committee of COLI and the Independent Shareholders in respect of the terms of the Disposal.

A circular containing, among other things, further details of the Disposal, the Distribution, a detail timetable and the recommendation of the independent board committee of COLI in respect of the Disposal and the advice of Access Capital in respect of the Disposal and the notice convening the Extraordinary General Meeting will be despatched to the Shareholders as soon as practicable.

As at the date of this announcement, Messrs. Kong Qingping (Chairman and Chief Executive), Yao Peifu (Vice Chairman), Cui Duosheng (Vice Chairman), Wu Jianbin, Xiao Xiao and Wang Man Kwan, Paul, Jin Xinzhong are executive Directors, Messrs. Cheung Shiu Kit is a non-executive Director and Messrs. Li Kwok Po, David, Lam Kwong Siu and Wong Ying Ho, Kennedy are the independent non-executive Directors.

The Disposal may or may not proceed. The listing of, and permission to deal in, the CSCIHL Shares will be subject to approval from the Stock Exchange and there is no assurance that the listing approval will be granted. Shareholders and potential investors of COLI should exercise caution when dealing in Shares.

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

“Access Capital”	Access Capital Limited, the independent financial adviser to the
	independent board committee of COLI and the Independent
	Shareholders in relation to the Disposal and a deemed licensed
	corporation for types 1, 4, 6 and 9 regulated activities under the
	Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
	Kong)
“associate”	has the meaning ascribed thereto in the Listing Rules
“Board”	the board of Directors
“Business Day”	a day (other than a Saturday or Sunday) on which banks are open in
	Hong Kong to the general public for business
“COHL”	China Overseas Holdings Limited, a company incorporated in Hong
	Kong, which is a wholly-owned subsidiary of CSCEC and as at the
	date of this announcement was interested in approximately 51% of the
	issued share capital of COLI
“COLI”	China Overseas Land & Investment Limited, a company incorporated
	in Hong Kong with limited liability and the shares of which are listed
	on the Main Board of the Stock Exchange
“COLI Group”	COLI and its subsidiaries

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“Companies	the Companies Ordinance, Chapter 32 of the Laws of Hong Kong (as
Ordinance”	amended)
“Completion”	completion of the Disposal
“Consideration	357,409,867 CSCIHL Shares, being 72.63% of the enlarged issued
Shares”	share capital of CSCIHL immediately upon the Listing
“COP”	(China Overseas Property Group Co., Ltd.), a
	Sino-foreign joint venture company established in the PRC, the
	registered capital of which is currently owned as to 79% indirectly by
	COLI
“CSCEC”	China State Construction Engineering Corporation ( ),
	a state-owned corporation organised and existing under the laws of
	PRC, being the ultimate controlling shareholder of COLI
“CSCEHK”	China State Construction Engineering (Hong Kong) Limited
	( ), a wholly-owned subsidiary of CSCIHL upon
	the Listing
“CSCIHL”	China State Construction International Holdings Limited
	( ), a company incorporated in the Cayman
	Islands with limited liability on 25 March 2004 under the Companies
	Law, Cap.22 (Law 3 of 1961, as consolidated and revised) of the
	Cayman Islands

• “CSCIHL Shares” shares of HK$0.10 each in the capital of CSCIHL

• “CSCIHL Group” CSCIHL and its subsidiaries

• “CSRC” China Securities Regulatory Commission

• “Director(s)” the director(s) of COLI

• “Disposal” the proposed disposal of the Sale Share by COLI to CSCIHL

• “Distribution” the declaration of a conditional special interim dividend to the Shareholders to be satisfied by way of a distribution in specie the Consideration Shares on the basis of 1 CSCIHL Share for every 18 Shares then held, rounded down to the nearest whole number

• “Enlarged CSCIHL CSCIHL and its subsidiaries upon Completion Group”

• “Extraordinary the extraordinary general meeting of COLI to be held for the purposes General Meeting” of considering, and if thought fit, to approve the Disposal and the Distribution or any adjournment thereof

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

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“Independent Shareholders other than COHL and its associates Shareholders” “IP Holding CSCEC Trade Mark Limited (being the registered proprietor of certain Companies” trademark of the Enlarged CSCIHL Group), Xun An Engineering Company Limited (being the registered proprietor of certain patent of the Enlarged CSCIHL Group) and Classicman International Limited (being the 100% holding company of CSCEC Trade Mark Limited) “Listing” the listing of CSCIHL Shares on the Main Board by way of an introduction pursuant to the Listing Rules “Listing Document” the listing document of CSCIHL relating to the Listing “Listing Rules” Rules Governing the Listing of Securities on the Stock Exchange “Loan” the amount of HK$149.6 million as due and owing from Zetson to COLI “Main Board” the Main Board of the Stock Exchange “PRC” the People’s Republic of China, and for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region and Taiwan “Property Interest Seawave Company Ltd. and Trade Brilliant Development Limited, Companies” both being holding companies of certain properties in Hong Kong which are unrelated to COLI and have been divested by CSCEHK back to COHL “Project the project management agreement dated 18 August 1993 and entered Management into between each of the Project Management Companies as project Agreement” manager, and CSCEC whose obligations and benefits under the agreement were novated to CSCEHK on 3 December 2001 “Project the project management companies wholly owned by Zetson, Management comprising China Overseas Building Construction Limited Companies” ( ), China Overseas Civil Engineering Limited ( ), China Overseas Foundation Engineering Limited ( ) which are responsible to implement construction projects as project manager

• “Project Zetson and the Project Management Companies Management Group”

• “Record Date” 30 June 2005, being the record date for determining the entitlement of Shareholders to the Distribution

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• “Remaining COLI the COLI Group other than the Project Management Group Group”

• “Sale and Purchase the sale and purchase agreement dated 3 June 2005 entered into Agreement” between COLI, COHL and CSCIHL in relation to the disposal of the Sale Share by COLI to CSCIHL

• “Sale Share” one share of US$1.00 each in the capital of Zetson representing the entire issued share capital of Zetson

• “Share(s)” share(s) of HK$0.10 each in the issued share capital of COLI

• “Shareholders” holders of the Shares

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Zetson” Zetson Enterprises Limited, a company incorporated in the British Virgin Islands, being the holding company of the Project Management Group

By order of the board China Overseas Land & Investment Limited Kong Qingping Chairman and Chief Executive

Hong Kong, 3 June 2005

Please also refer to the published version of this announcement in The Standard.

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