Beijing Urban Construction Design & Development Group Co., Limited — Proxy Solicitation & Information Statement 2002

Mar 27, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in China Overseas Land & Investment Limited, you should at once hand this circular to the purchaser or the transferee or to the bank or stockbroker or other agent through whom the sale or the transfer was effected for transmission to the purchaser or the transferee.

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.

==> picture [39 x 40] intentionally omitted <==

==> picture [319 x 29] intentionally omitted <==

CHINA OVERSEAS LAND & INVESTMENT LTD.

(incorporated in Hong Kong with limited liability)

CONNECTED TRANSACTION

INVOLVING THE SUBSCRIPTION OF NEW EQUITY INTEREST IN A PRC SUBSIDIARY BY AN ASSOCIATE OF THE CONTROLLING SHAREHODLER OF THE COMPANY

Independent Financial Adviser to the Independent Board Committee of China Overseas Land & Investment Limited

==> picture [38 x 38] intentionally omitted <==

Yu Ming Investment Management Limited

A letter from the Independent Board Committee of China Overseas Land & Investment Limited is set out on page 8 of this circular. A letter from Yu Ming Investment Management Limited, the independent financial adviser, containing its advice to the Independent Board Committee of China Overseas Land & Investment Limited is set out on pages 9 to 14 of this circular.

A notice convening an extraordinary general meeting of China Overseas Land & Investment Limited to be held at 30th Floor, China Overseas Building, 139 Hennessy Road, Hong Kong on Thursday, 11th April, 2002 at 10:00 a.m. is set out on page 19 of this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible to the registered office of China Overseas Land & Investment Limited at 29th Floor, China Overseas Building, 139 Hennessy Road, Hong Kong and in any event not less than 48 hours before the time appointed for the meeting. Completion and return of the form of proxy shall not preclude you from attending and voting at the meeting or any adjourned meeting should you so desire.

25th March, 2002

China Overseas Land & Investment Ltd.

CONTENTS

Pages	Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Subscription Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Information on COBD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Reason for the Subscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Business of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Letter from Yu Ming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Appendix — Statutory and General Information . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19

— i —

China Overseas Land & Investment Ltd.

DEFINITIONS

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

“Board”		the board of directors of the Company
“COBD”		China Overseas Building Development (Shenzhen) Limited ( ), an indirect wholly owned
		subsidiary of the Company, established in Shenzhen,
		Guangdong Province, PRC
“COZG”		China Overseas (Zhong Guo) Limited, a company
		incorporated in Hong Kong, being an indirect wholly owned
		subsidiary of the Company
“CSCEC”		China State Construction Engineering Corporation, a state-
		owned corporation organised and existing under the laws of
		the PRC, being the ultimate controlling shareholder of the
		Company
“Company”		China Overseas Land & Investment Limited, a company
		incorporated in Hong Kong with limited liability, the Shares
		of which are listed on the main board of the Stock Exchange
“Directors”		the directors of the Company
“EGM”		the extraordinary general meeting of the Company convened
		to be held at 30th Floor, China Overseas Building, 139
		Hennessy Road, Hong Kong on Thursday, 11th April, 2002 at
		10:00 a.m. to consider and, if appropriate, to approve the
		ordinary resolution contained in the notice of the meeting
		which is set out on page 19 of this circular
“Group”		the Company and its subsidiaries
“HK$”		Hong Kong dollars, the lawful currency of Hong Kong
“Independent	Board Committee”	the independent board committee of the Company, comprising
		Dr. Li Kwok Po, David, Dr. Chau Cham Son and Mr. Hu Zhao
		Guang
“Independent	Subscribers”	three PRC entities, namely Shenzhen Zhi Qu Consulting
		Services Co., Ltd., Shenzhen Yong Fu Tong Industrial Co.,
		Ltd. and Shenzhen Xi Feng Chun Consulting Services Co.
		Ltd., each of which and their beneficial owners are
		independent third party not connected with any of the
		directors, chief executive or substantial shareholders of the
		Company or any of its subsidiaries or an associate (as defined
		in the Listing Rule) of any of them

— 1 —

China Overseas Land & Investment Ltd.

DEFINITIONS

“Independent Shareholders”	Shareholders of the Company other than CSCEC and its	Shareholders of the Company other than CSCEC and its	Shareholders of the Company other than CSCEC and its	Shareholders of the Company other than CSCEC and its
	associates (as defined in the Listing Rules)
“Latest Practicable Date”	22nd March, 2002, being the latest practicable date for
	ascertaining certain information referred to in this circular
	prior to			the printing of this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“New Equity Interest”	new equity interest representing 11% interests in COBD as
	enlarged			by the Subscription by SCO and the subscription by
	the Independent Subscribers
“PRC”	The People’s Republic of China
“RMB”	Renminbi, the lawful currency of the PRC
“SCO”	Shenzhen China Overseas Investment Management Co., Ltd.
	(			), a company incorporated in the
	PRC with limited liability, being a subsidiary owned by
	CSCEC		as to 95%
“SDI Ordinance”	the Securities (Disclosure of Interests) Ordinance (Chapter
	396 of	the Laws of Hong Kong), as amended from time to
	time
“Share(s)”	share(s)			of HK$0.10 each in the issued share capital of the
	Company
“Shareholders”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription”	the subscription of the New Equity Interest by SCO pursuant
	to the Subscription Agreement
“Subscription Agreement”	the conditional subscription agreement entered into between
	COZG,		SCO, and the Independent Subscribers dated 14th
	March,		2002
“Yu Ming”	Yu Ming Investment Management Limited, a dealer and an
	investment adviser registered under the Securities Ordinance
	(Chapter 333 of the Laws of Hong Kong) and the independent
	financial adviser to the Independent Board Committee

“%”

per cent

— 2 —

China Overseas Land & Investment Ltd.

LETTER FROM THE BOARD

==> picture [39 x 39] intentionally omitted <==

==> picture [319 x 30] intentionally omitted <==

CHINA OVERSEAS LAND & INVESTMENT LTD.

(incorporated in Hong Kong with limited liability)

Executive Directors: Sun Wen Jie (Chairman) Kong Qingping (Vice Chairman) Yao Peifu (Vice Chairman) Yao Xiancheng (Vice Chairman) Li Fuyou Cui Duosheng Cheung Shiu Kit Yip Chung Nam Luo Weikang

Registered Office: 29th Floor China Overseas Building 139 Hennessy Road Hong Kong

Independent Non-Executive Directors:

Li Kwok Po, David O.B.E., J.P. Chau Cham Son O.B.E., J.P.

Hu Zhao Guang

25th March, 2002

To the Shareholders

Dear Sir/Madam,

CONNECTED TRANSACTION INVOLVING THE SUBSCRIPTION OF NEW EQUITY INTEREST IN A PRC SUBSIDIARY BY AN ASSOCIATE OF THE CONTROLLING SHAREHOLDER OF THE COMPANY

INTRODUCTION

The Board announced on 14th March, 2002 that on the same day, COZG, SCO and the Independent Subscribers entered into the Subscription Agreement pursuant to which COBD, an indirect wholly owned subsidiary of the Company, will allot new equity interests to SCO and the Independent Subscribers for a total cash consideration of RMB99,524,100.

SCO is owned as to 95% by CSCEC, which is the ultimate controlling shareholder of the Company. CSCEC, through its wholly owned subsidiary China Overseas Holdings Limited, beneficially interested in approximately 57.15% of the outstanding issued share capital of the Company. Since SCO is an associate of the substantial shareholder of the Company, SCO is therefore a connected person of the Company pursuant to the Listing Rules. Based on the above, the subscription by SCO of New Equity Interest in COBD constitutes a connected transaction for the Company

— 3 —

China Overseas Land & Investment Ltd.

LETTER FROM THE BOARD

pursuant to Rule 14.26(3) of the Listing Rules. The Subscription contemplated under the Subscription Agreement requires approval from the Independent Shareholders at the EGM. China Overseas Holdings Limited and its associates will abstain from voting in respect of the resolution approving the Subscription Agreement.

The purpose of this circular is to give Shareholders further details of the Subscription Agreement and the subscription contemplated thereunder, and set out the recommendation of the Independent Board Committee and the advice of Yu Ming in respect of the Subscription Agreement.

THE SUBSCRIPTION AGREEMENT

Date

14th March, 2002

Subscribing Parties

• i. COZG, an indirect wholly owned subsidiary of the Company;

• ii. SCO, a subsidiary owned by CSCEC as to 95%, which is the ultimate controlling shareholder of the Company beneficially interested in approximately 57.15% of the issued share capital of the Company held under its wholly owned subsidiary China Overseas Holdings Limited; and

• iii. the Independent Subscribers.

Transaction

Pursuant to the Subscription Agreement, COBD will allot new equity interests as follows:

Subscribers Enlarged registered capital in COBD SCO 11% Independent Subscribers 10% Total 21%	Consideration (in RMB) (HK$ Equivalent) 52,131,800 49,180,900 47,392,300 44,709,700 99,524,100 93,890,600	Consideration (in RMB) (HK$ Equivalent) 52,131,800 49,180,900 47,392,300 44,709,700 99,524,100 93,890,600
		93,890,600

The Group will be interested in 79% of COBD upon completion of Subscription.

— 4 —

China Overseas Land & Investment Ltd.

LETTER FROM THE BOARD

The consideration was determined after arm’s length negotiations between the parties. The consideration for the 21% new equity interests represents a premium of approximately 3.04% to the adjusted net tangible asset value attributable to 21% of COBD of HK$91,117,039 (being 21% of the adjusted estimated net tangible asset value of COBD of HK$433,890,660 as at 31st December, 2001, as adjusted by, inter alia, preliminary revaluation of properties as at 31st December, 2001 by an independent firm of valuers, DTZ Debenham Tie Leung Limited, and the Subscription). The Board is of the opinion that the consideration is fair and reasonable so far as the interests of the Company and its shareholders are concerned.

Constitution of the board of directors of COBD

After the Subscription, the board of COBD will comprise thirteen (13) directors in which COZG will nominate eight (8) directors, SCO will nominate two (2) directors and each of the Independent Subscribers will nominate one (1) director. There was no independent director on the board of COBD as at the Latest Practicable Date.

Conditions

The Subscription Agreement is subject to the fulfilment of the following conditions:

1. the Independent Shareholders having approved the Subscription Agreement and the Subscription contemplated thereunder at the EGM; and

2. subject to the approval of the relevant authorities in the PRC, the issue of a certificate of approval to COBD by the Commerce and Industrial Bureau of the PRC. It is expected that the certificate of approval will be granted to COBD by October 2002.

Completion

Completion is expected to take place within 5 business days after the issue of certificate to COBD.

INFORMATION ON COBD

COBD was established in the PRC on 8th August, 1988. Its principal activities are investment holding, property development, trading and investment and building construction in the PRC. Its assets are properties in the PRC including properties under development, properties for sale, and properties for own use and rental.

— 5 —

China Overseas Land & Investment Ltd.

LETTER FROM THE BOARD

The profit before and after tax of COBD for the past two years (after adjustments according to Hong Kong Generally Accepted Accounting Practice) are as follows:

				31.12.2000	30.06.2001	31.12.2001
				(Audited)	(Unaudited)	(Estimated)
				HK$	HK$	HK$
Profit	before	tax		29,955,600	141,528	2,699,300
Profit	(Loss)	after	tax	36,711,600	(350,100)	2,294,400

REASON FOR THE SUBSCRIPTION

The Group intends to expand its property development business in the PRC. CSCEC, the ultimate holding company of the Company, has the prerequisite qualifications and experience to carry out property development projects in the PRC. CSCEC will be indirectly interested in 11% in COBD, through SCO, immediately after the Subscription. With the assistance of CSCEC, the possibility of COBD to obtain a nationwide property development license will improve. COBD will, once the license is obtained, be able to increase its market share which is beneficial to its future development in the PRC.

USE OF PROCEEDS

The net proceeds from the Subscription of approximately RMB 99 million (equivalent to approximately HK$93.6 million) will be applied for acquiring lands for future development of COBD should suitable investment opportunities arise.

BUSINESS OF THE COMPANY

The Group is principally engaged in property development and investment, building and civil construction, foundation engineering and project management, real estate agency and management, infrastructure project investments, and trading of securities.

EGM

A notice convening the EGM to be held at 30th Floor, China Overseas Building, 139 Hennessy Road, Hong Kong on Thursday, 11th April, 2002 at 10:00 a.m. has been sent to Shareholders on 25th March, 2002 is also set out on page 19 of this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible to the registered office of the Company at 29th Floor, China Overseas Building, 139 Hennessy Road, Hong Kong and in any event not less than 48 hours before the time appointed for the meeting. Completion and return of the form of proxy shall not preclude you from attending and voting at the meeting or any adjourned meeting should you so desire. China Overseas Holdings Limited and its associates will abstain from voting in respect of the resolution approving the Subscription Agreement.

— 6 —

China Overseas Land & Investment Ltd.

LETTER FROM THE BOARD

GENERAL

Since the Subscription involves the allotment of New Equity Interest by COBD to SCO, a subsidiary owned by CSCEC as to 95%, the ultimate controlling shareholder beneficially interested in 57.15% issued share capital of the Company, the Subscription constitutes a connected transaction for the Company.

Pursuant to the Listing Rules, the Subscription is subject to the approval of the Independent Shareholders. CSCEC and their respective associates will abstain from voting on the resolution relating to the Subscription at the EGM to be held to consider the Subscription.

The Independent Board Committee has been formed to advise the Independent Shareholders on the Subscription. Yu Ming has been appointed as the independent financial adviser to advise the Independent Board Committee. The text of a letter to the Independent Shareholders from the Independent Board Committee containing their recommendation is set out on page 8 of this Circular. Having regard to the opinion of Yu Ming which is set out on pages 9 to 14 of this Circular, the Independent Board Committee is of the opinion that the Subscription Agreement and the Subscription contemplated thereunder is being fair and reasonable insofar as the interests of the Independent Shareholders and the Company as a whole are concerned. Accordingly, the Independent Board Committee recommends that the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Subscription Agreement and the Subscription contemplated thereunder.

ADDITIONAL INFORMATION

Your attention is drawn to the information set out in the sections headed “Letter from the Independent Board Committee”, “Letter from Yu Ming” and “Statutory and General Information” of this Circular.

Yours faithfully, By order of the Board CHINA OVERSEAS LAND & INVESTMENT LIMITED Kong Qingping

Vice Chairman

— 7 —

China Overseas Land & Investment Ltd.

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [39 x 39] intentionally omitted <==

==> picture [319 x 30] intentionally omitted <==

CHINA OVERSEAS LAND & INVESTMENT LTD.

(incorporated in Hong Kong with limited liability)

25th March, 2002

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION INVOLVING THE SUBSCRIPTION OF NEW EQUITY INTEREST IN A PRC SUBSIDIARY BY AN ASSOICATE OF THE CONTROLLING SHAREHOLDER OF THE COMPANY

We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders in respect of the Subscription contemplated under the Subscription Agreement, details of which are set out in the section headed “Letter from the Board” in the circular dated 25th March, 2002 (the “Circular”) to the Shareholders of the Company which this letter forms part. Unless the context otherwise requires, terms defined in the Circular shall have the same meanings when used in this letter.

Having taken into account the advice of Yu Ming, the independent financial adviser, we consider the terms of the Subscription Agreement are fair and reasonable so far as the interests of the Independent Shareholders are concerned and that the entering into of the Subscription Agreement is in the interest of the Company and the Independent Shareholders.

Accordingly, we recommend that the Independent Shareholders to vote in favour of the resolution approving the Subscription Agreement and all transactions contemplated thereunder at the EGM.

		Yours faithfully,
		Independent Board Committee
**Li **	Kwok Po, David	Chau Cham Son	Hu Zhao Guang
	Director	Director	Director

— 8 —

China Overseas Land & Investment Ltd.

LETTER FROM YU MING

==> picture [37 x 37] intentionally omitted <==

YU MING INVESTMENT MANAGEMENT LIMITED SUITE 51, 5TH FLOOR, NEW HENRY HOUSE, 10 ICE HOUSE STREET, CENTRAL, HONG KONG

25th March, 2002

China Overseas Land & Investment Limited 29th Floor China Overseas Building 139 Hennessy Road Hong Kong

To the Independent Board Committee

Dear Sir or Madam,

CONNECTED TRANSACTION INVOLVING THE SUBSCRIPTION OF NEW EQUITY INTEREST IN A PRC SUBSIDIARY BY AN ASSOICATE OF THE CONTROLLING SHAREHOLDER OF THE COMPANY

INTRODUCTION

We have been appointed to advise the Independent Board Committee in respect of the Subscription Agreement and the Subscription contemplated thereunder, details of which are set out in the Letter from the Board in the circular to the Shareholders of the Company dated 25th March, 2002 (the “Circular”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

In formulating our opinion, we have relied on the statements, information, opinions and representations contained in the Circular and the information and representations provided to us by the Directors. We have assumed that all information, representations and opinions contained or referred to in the Circular and all information, representations and opinions which have been provided by the Directors for which they are solely responsible are, to the best of their knowledge, true and accurate at the time they were made and continue to be so on the date of this letter.

We consider that we have been provided with sufficient information on which to form a reasonable basis for our opinion. We have no reason to suspect that any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and the representations and opinions made to us untrue, inaccurate or misleading. Having made all reasonable enquiries, the Directors have further confirmed that, to the best of their knowledge, they believe there are no other facts or representations the omission of which would make any statement in the Circular, including this letter, misleading. We have not, however, carried out any independent verification of the information provided by the Directors, nor have we conducted an independent investigation into the business and affairs of the Group or COBD.

— 9 —

China Overseas Land & Investment Ltd.

LETTER FROM YU MING

The Subscription Agreement

On 14th March, 2002, COZG, SCO and the Independent Subscribers entered into the Subscription Agreement pursuant to which COBD, currently an indirect wholly owned subsidiary of the Company, will allot new equity interests to SCO and the Independent Subscribers for a total cash consideration of RMB99,524,100.

SCO is owned as to 95% by CSCEC, which is the ultimate controlling shareholder of the Company. CSCEC, through it’s wholly owned subsidiary China Overseas Holdings Limited, beneficially interested in approximately 57.15% of the outstanding issued share capital of the Company. Since SCO is an associate of the substantial shareholder in the Company, SCO is therefore a connected person of the Company pursuant to the Listing Rules. Based on the above, the subscription by SCO of equity interests in COBD constitutes a connected transaction pursuant to Rule 14.26(3) of the Listing Rules. The Subscription contemplated under the Subscription Agreement requires approval from the Independent Shareholders at the EGM. China Overseas Holdings Limited and its associates will abstain from voting in respect of the resolution approving the Subscription Agreement.

PRINCIPAL FACTORS AND REASONS CONSIDERED

Rationale of the Subscription Agreement

The principal activities of the Group include property development, property letting, building and civil construction, foundation engineering and project management, real estate agency and management, infrastructure project investments and securities trading and placement of funds. Property development projects are undertaken by the Group in Hong Kong and across major cities in the PRC including Shenzhen, Guangzhou, Chengdu, Shanghai and Beijing. For the year ended 31st December, 2000, sale of properties and property letting represented 50% of the total turnover of the Group, up from 31% in 1999. Contribution to operating profit before impairment losses from sale of properties and property letting decreased slightly from 39% in 1999 to 34% in 2000. From a geographical prospective, the Group is deriving increasing proportion of income from the PRC with turnover attributable to activities in the PRC rose from 33% in 1999 to 36% in 2000. The PRC markets provided the most profitable property development projects for the Group in both 1999 and 2000.

In the most recent annual report and semi-annual report issued by the Group, Mr. Sun Wen Jie, the chairman of the Company, has reiterated the Group’s strategy in achieving growth through property development and construction business and stressed the ample opportunities offered by the PRC market given the strong growth in internal demand and the imminent accession of PRC into the World Trade Organization.

— 10 —

China Overseas Land & Investment Ltd.

LETTER FROM YU MING

Currently the Group only possesses, through various subsidiaries including COBD, property development licenses for selected cities in the PRC, which allow subsidiaries of the Group to carry out property development projects in the cities where such licenses are issued. The limitation to the growth of the Group by these city-based property development licenses will become apparent when more opportunities are offered in the PRC. According to the letter from the board in this Circular, CSCEC has the required qualifications and experiences to carry out property development projects nationwide and the introduction of CSCEC as an indirect shareholder in COBD will improve the likelihood of COBD being granted a nationwide property development license. Furthermore, the Subscription will be in the form of cash consideration. As a result, COBD will be provided with additional cash reserve for the purposes of working capital and investment outlays. COBD will be able to act more swiftly should investment opportunities arise after the completion of the Subscription. Such investment opportunities will generally be in the form of additional land reserve for future property development projects.

In our point of view, the Subscription is in line with the growth strategy set out by the Group and such strategy has been supported by contributions made by property development projects and operations in the PRC to the overall performance of the Group in the most recent financial periods. Therefore, we concur with the view of the Directors that the transaction contemplated under the Subscription Agreement is beneficial to the Group and the entering of the Subscription Agreement by the Group is being fair and reasonable insofar as the Independent Shareholders are concerned.

Terms of the Subscription Agreement

Consideration

The consideration for the Subscription is negotiated on arm’s length terms between the Company, SCO and the Independent Subscribers based on the unaudited net tangible asset value of COBD as at 31st December, 2001 adjusted by, inter alia, preliminary revaluation of properties held by COBD and the proceeds from the Subscription.

We believe the use of net tangible asset value adjusted for revaluation as the basis of valuation as reasonable since it is generally accepted that property development companies are appraised by their net tangible asset base rather than other accepted methods of appraisal like price-to-earnings ratio and discounted cash flow. For price-to-earnings ratio, it is more suitable to companies with less tangible asset backing while discounted cash flow is more suitable for high growth companies at loss making stage for which no profit record is available.

— 11 —

China Overseas Land & Investment Ltd.

LETTER FROM YU MING

The table below set out 20 companies listed on the Stock Exchange which engage in property development and investment in the PRC which shows comparable companies are currently trading at an average price-to-book discount of approximately 35.64%. The price-to-book value of these 20 companies range from a discount of 94.5% to a premium of 283%, of which 12 companies trade below and 8 companies trade above the average. The table below summarizes the sample in the above analysis:

		Price-to-book
		(discount)/
		premium as at
Stockcode	Name of Company	14th March, 2002
		(%)
1124	Costal Realty Group	(94.5)
296	Emperor (China Concept) Investments	(91.1)
1176	Nam Fong International Holdings	(91.1)
1125	Lai Fung Holdings	(90.8)
271	Dan Form Holdings	(82.1)
917	New World China Land	(81.1)
85	Winsan (China) Investment	(76.8)
268	Top Glory International Holdings	(75.2)
246	Henderson China Holdings	(74.8)
258	Tomson Group	(70.8)
28	Tian An China Investments	(63.9)
149	China Land Group	(61.3)
1109	China Resources Beijing Land	(35.3)
588	Beijing North Star	(35.2)
121	Hong Kong Fortune	(34.9)
754	Hopson Development Holdings	(32.2)
604	Shenzhen Investment	14.1
649	Shimao China Holdings	30.1
1207	Shanghai Real Estate	115.6
115	Grand Field Group Holdings	283.3
Adjusted Average	(removing the highest and the lowest sample)	(46.5)

The above sample was generated by a company search conducted through a leading financial data vendor under the category of “Real Estate Operations/Development”, which derive significant income from property development and from operations in the PRC. We believe the above sample has extensive coverage on PRC property developers and also serves as representative, fair and reasonable reference to the consideration of the Subscription.

— 12 —

China Overseas Land & Investment Ltd.

LETTER FROM YU MING

The consideration of the Subscription represents a premium of approximately 3.04% to the net tangible assets value of COBD as adjusted by, inter alia, an independent preliminary revaluation carried out by DTZ Debenham Tie Leung Limited. Based on the above sample of 18 companies, adjusted for outliners effect, the average discount to net asset value is 46.5%, the premium of 3.04% paid by SCO and the Independent Subscribers is obviously well above the average price prevailing on the Stock Exchange. Furthermore, the fairness of the valuation is further supported by the subscription from the Independent Subscribers on the same terms. Therefore, we concur with the view by the Directors that the consideration for the Subscription is negotiated in arm’s length terms and we believe the consideration is being fair and reasonable insofar as the Independent Shareholders are concerned.

Management and Board composition of COBD

As contemplated in the Subscription Agreement, upon completion of the Subscription, the board of COBD will comprise 13 directors. COZG will retain eight seats while SCO will be entitled to two seats. Each of the Independent Subscribers will be entitled to one seat in the board of COBD. The board composition is largely in proportionate to the respective equity interests held by COZG and each prospective shareholder. Most importantly, COZG is going to retain majority representation on the board of COBD subsequent to completion of the Subscription. Moreover, COBD will have one general manager and two vice general managers of which the general manager and one of the vice general managers will be recommended by COZG. Consequently, COZG will retain control in the management of COBD. Therefore, we are of the view the proposed management structure and board composition of COBD are fair and reasonable insofar as the Group and the Independent Shareholders are concerned.

Financial Impact of the Subscription on the Group

(i) Net Tangible Assets

Based on the unaudited consolidated net tangible asset value of the Group of approximately HK$8.195 billion as at 30th June, 2001 and 5,464,303,609 Shares in issue as at the Latest Practicable Date, the unanudited net tangible asset value per Share was approximately HK$1.50. Subsequent to the completion of the Subscription, the adjusted net tangible asset value of the Group will become approximately HK$8.205 billion. Based on 5,464,303,609 Shares in issue as at the Latest Practicable Date, the pro forma unaudited adjusted consolidated net tangible asset value per Share will become approximately HK$1.50, representing an immaterial change.

(ii) Profit and Loss

The Group is estimated to record investment gain of approximately HK$9.7 million as a result of the Subscription at a premium to the net tangible asset value by SCO and the Independent Subscribers.

— 13 —

China Overseas Land & Investment Ltd.

LETTER FROM YU MING

(iii) Working Capital

The Company has cash balance of over HK$800 million as at the end of 31st December, 2000. Since no cash outlay is required by the Company, working capital position of the Company is not expected to be affected by the Subscription. However, with the additional capital provided to COBD in the form of cash, the working capital position of the Group is expected to improve.

(iv) Dilution

Equity interests held by the Company in COBD will be reduced from 100% to 79% subsequent to the completion of the Subscription. Having considered that the consideration is being fair and reasonable, we are of the opinion that the benefits of the Subscription to the Company outweigh the dilution effect.

RECOMMENDATION

Having taken into account the information and representations provided to us and the above principal factors, we are of the opinion that the terms and the Subscription contemplated in the Subscription Agreement are fair and reasonable insofar as the Company and the Independent Shareholders are concerned and the Subscription is in the interest of the Company and the Independent Shareholders. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the resolution to approve the Subscription contemplated under the Subscription Agreement.

Yours faithfully, For and on behalf of

YU MING INVESTMENT MANAGEMENT LIMITED Warren Lee

Director

— 14 —

China Overseas Land & Investment Ltd.

STATUTORY AND GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

• (1) As at the Latest Practicable Date, the Directors of the Company and their respective associates had the following interests in the securities of the Company or any of its associated corporations (as defined in the SDI Ordinance) which were required to be notified to the Company and the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including interests which they were taken or deemed to have under Section 31 or Part I of the Schedule to the SDI Ordinance), or which were required to be entered in the register maintained by the Company pursuant to Section 29 of the SDI Ordinance, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies:

(a) Personal Interests in the Shares

Name of director	Number of Shares
Mr. Kong Qingping	460,000
Mr. Li Fuyou	500,000
Mr. Yao Peifu	500,000
Mr. Yao Xiancheng	500,000
Mr. Cui Duosheng	5,360,000
Mr. Yip Chung Nam	1,200,000
Mr. Luo Weikang	220,000
Dr. Li Kwok Po, David	200,000

— 15 —

China Overseas Land & Investment Ltd.

STATUTORY AND GENERAL INFORMATION

APPENDIX

• (b) Interests in options to acquire Shares

	Number of Shares under options granted on	Number of Shares under options granted on	Number of Shares under options granted on
	17th July,	14th February,	30th September,	4th January,
	1997	1998	1998	2000
	(Note 1)	(Note 2)	(Note 3)	(Note 4)
Name of Director
Sun Wen Jie	6,880,000	20,000,000	3,800,000	2,500,000
Li Fuyou	3,800,000	15,000,000	2,000,000	2,000,000
Yao Xiancheng	3,800,000	15,000,000	2,000,000	2,000,000
Yao Peifu	3,800,000	15,000,000	2,000,000	2,000,000
Kong Qingping	1,000,000	11,000,000	1,840,000	2,000,000
Cui Duosheng	1,000,000	9,000,000	1,440,000	1,700,000
Cheung Shiu Kit	1,000,000	—	—	—
Yip Chung Nam	800,000	1,000,000	—	—
Luo Weikang	900,000	5,000,000	880,000	1,500,000

Notes:

• (1) The share options were granted at an exercise price of HK$4.06 per Share, exercisable for the period from 17th July, 1998 to 16th July, 2007 (both days inclusive).

• (2) The share options were granted at an exercise price of HK$1.08 per Share, exercisable for the period from 14th February, 1999 to 13th February, 2008 (both days inclusive).

• (3) The share options were granted at an exercise price of HK$0.52 per Share, exercisable for the period from 30th September, 1999 to 29th September, 2008 (both days inclusive).

• (4) The share options were granted at an exercise price of HK$0.58 per Share, exercisable for the period from 4th January, 2001 to 3rd January, 2010 (both days inclusive).

Save as disclosed above, as at the Latest Practicable Date, none of the Directors , or their associates had or were deemed to have any interests in any securities of the Company or any of its associated corporations (as defined in the SDI Ordinance) which was required to be notified to the Company and the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including interests which they were taken or deemed to have under Section 31 of or Part 1 of the Schedule to the SDI Ordinance) or which was required pursuant to Section 29 of the SDI Ordinance to be entered in the register referred to therein, or which was required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, and none of the Directors or chief executive of the Company, or their spouse or children under the age of 18, had any right to subscribe for any securities of the Company, or had exercised any such right.

— 16 —

China Overseas Land & Investment Ltd.

APPENDIX

STATUTORY AND GENERAL INFORMATION

• (2) Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors had any direct or indirect interests in any assets which have since 31st December, 2000 (being the date to which the latest published audited consolidated accounts of the Group were made up) been acquired or disposed of by or leased to or by the Company or any of its subsidiaries, or are proposed to be acquired or disposed of by or leased to the Company or any of its subsidiaries.

• (3) Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement entered into by the Company or any of its subsidiaries, which was subsisting and was significant in relation to the business of the Group.

3. SERVICE CONTRACTS

There are no existing or proposed service contracts between any of the Directors and the Company or any of its subsidiaries respectively, other than contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation).

4. SUBSTANTIAL SHAREHOLDERS

Save as disclosed below, as at the Latest Practicable Date and as far as the Directors are aware or can be ascertained after reasonable enquiry and according to the register kept by the Company under Section 16(1) of the SDI Ordinance, no persons (other than the Directors and chief executives of the Company whose interests are disclosed above) had an interest of 10% or more of the issued share capital of the Company.

		Approximate percentage
	Number of	of the outstanding share
Name of Shareholder	Shares held	capital of the Company
China Overseas Holdings Limited	3,122,890,800	57.15%
CSCEC	3,122,890,800	57.15%

CSCEC owns 100% of China Overseas Holdings Limited and is accordingly deemed by the SDI Ordinance to be interested in 3,122,890,800 Shares directly owned by China Overseas Holdings Limited.

5. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

— 17 —

China Overseas Land & Investment Ltd.

STATUTORY AND GENERAL INFORMATION

APPENDIX

6. EXPERT’S DISCLOSURE OF INTEREST AND CONSENT

As at the Latest Practicable Date, Yu Ming had no direct or indirect shareholding in any member of the Group, or any right to subscribe for or to nominate persons to subscribe for shares in any member of the Group.

As at the Latest Practicable Date, Yu Ming had no interests, either directly or indirectly, in the promotion of or in any assets which have been since 31st December, 2000 (being the date to which the latest published audited consolidated accounts of the Group were made up) acquired by or disposed of or leased to, or are proposed to be acquired by or disposed of or leased to any member of the Group.

Yu Ming has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which it appears.

7. MISCELLANEOUS

• (a) Save as disclosed herein, the Directors are not aware of any material adverse change in the Group’s financial or trading position since 31st December, 2000, the date to which the latest published audited consolidated accounts of the Group were made up.

• (b) The secretary of the Company is Mr. Keith Cheung, who is a practicing solicitor.

• (c) The registered office of the Company is situate at 29th Floor, China Overseas Building, 139 Hennessy Road, Hong Kong.

• (d) The English text of this circular shall prevail over the Chinese text.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours on any weekday (public holidays excepted) at the offices of the Company, 29th Floor, China Overseas Building, 139 Hennessy Road, Hong Kong up to and including 11th April, 2002:

• (a) the letter from the Independent Board Committee as set out on page 8 of this circular;

• (b) the letter from Yu Ming as set out on pages 9 to 14 of this circular;

• (c) the written consent referred to in paragraph 6 of this Appendix; and

• (d) the Subscription Agreement.

— 18 —

China Overseas Land & Investment Ltd.

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [39 x 39] intentionally omitted <==

==> picture [319 x 30] intentionally omitted <==

CHINA OVERSEAS LAND & INVESTMENT LTD.

(incorporated in Hong Kong with limited liability)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of China Overseas Land & Investment Limited be held at 30th Floor, China Overseas Building, 139 Hennessy Road, Hong Kong on Thursday, 11th April, 2002 at 10:00 a.m. or any adjournment thereof for the purpose of considering and, if thought fit, passing with or without modifications, the following resolution which will be proposed as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT the Subscription Agreement (the “ Subscription Agreement ”, a copy of which has been tabled before the meeting and marked “A” and signed by the chairman of this meeting for the purpose of identification) and the transactions contemplated thereunder be and are hereby approved and that the directors of the Company be and are hereby authorised to do whatever they may consider necessary, desirable or expedient to effect the Subscription Agreement and the transactions contemplated thereunder into effect with such changes as the directors of the Company may consider necessary, desirable or expedient.”

By order of the Board China Overseas Land & Investment Limited Keith Cheung Company Secretary

Hong Kong, 25th March, 2002

Notes:

1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company.

2. In order to be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a certified copy thereof, must be deposited at the registered office of the Company at 29th Floor, China Overseas Building, 139 Hennessy Road, Hong Kong not less than 48 hours before the time appointed for the holding of the Meeting or any adjourned Meeting at which the person named in the form of proxy proposes to vote.

3. A copy of this notice has been dispatched to shareholders of the Company on 25th March, 2002.

— 19 —

China Overseas Land & Investment Ltd.