Beijing Urban Construction Design & Development Group Co., Limited - Proxy Solicitation & Information Statement 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, 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 and the accompanying form of proxy to the purchaser or to the bank, stockbroker or other agent through whom the sale or 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.

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(incorporated in Hong Kong with limited liability)

CONNECTED TRANSACTIONS

RESTRUCTURING OF THE GROUP’S PROPERTY DEVELOPMENT AND INVESTMENT OPERATIONS IN PRC

Independent Financial Adviser to the Independent Board Committee

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A letter from the Independent Board Committee is set out on page 38 of this circular. A letter from Yu Ming Investment Management Limited to the Independent Board Committee is set out on pages 39 to 58 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, Wanchai, Hong Kong at 10:00 a.m. on Friday, 30 January 2004 is set out on pages at the end of this circular. Whether or not you are able to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s registrars, Standard Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the Extraordinary General Meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjourned meeting should you so wish.

14 January 2004

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	39
Appendix I – Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	59
Appendix II – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	93
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	101

DEFINITIONS

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

“BCOHT” 北京中海豪庭房地產開發有限公司 (Beijing China Overseas Haoting Property Development Company Limited), a company established in PRC, the registered capital of which is owned as to 70% by BCOP and 30% by SCO immediately before the completion of the BCOHT Agreement
“BCOHT Agreement” an agreement entered into between (1) SCO and (2) COP relating to the sale and purchase of the registered capital in BCOHT
“BCOP” 北京中海房地產開發有限公司 (Beijing China Overseas Property Development Company Limited), a company established in PRC, the registered capital of which is owned as to 80% by COP and 20% by SCOP
“Beijing Guo Run” 北京國潤房地產開發經營有限公司 (Beijing Guo Run Property Development Limited), a company established in PRC, the registered capital of which is owned as to 75% by Beijing Xingye and 25% by an independent third party unrelated to any director, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associate immediately before the completion of the Guo Run Agreement
“Beijing Seagarden” 北京中海海洋花園房地產開發有限公司 (Beijing Zhonghai Seagarden Real Estate Development Co., Ltd), a company established in PRC, the registered capital of which is owned as to 67% by COB, 5% by Beijing Xingye and 28% by an independent third party not connected with any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any associate of any of them immediately before the completion of the Seagarden Agreement
“Beijing Tiancheng” 北京中海天成房地產開發有限公司 (Beijing China Overseas Tiancheng Real Estate Development Co., Ltd), a company established in PRC, the registered capital of which is owned as to 49% by Beijing Xingye and 51% by COB immediately before the completion of the Tiancheng Agreement
“Beijing Xingye” 北京中海興業房地產開發有限公司 (Beijing Zhong Hai Xing Ye Real Estate Development Co., Ltd.), a company established in PRC, being an indirect wholly owned subsidiary of the Company
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DEFINITIONS

“Beijing Yorkley”	北京億利房地產開發有限公司(Beijing Yorkley Real Estate
	Development Co., Ltd.), a company established in PRC, being an
	indirect non-wholly owned subsidiary of Gain Direct
“Board”	the board of directors of the Company
“CCHK”	China Construction (Hong Kong) Investment Company Limited, a
	company incorporated in Hong Kong, being a direct wholly owned
	subsidiary of COP
“CCOP”	長春中海地產有限公司(Changchun China Overseas Property
	Co., Ltd.), a Sino-foreign joint venture company established in
	PRC, the registered capital of which is owned as to 25% by the
	Company and 75% by COP immediately before the completion of
	the CCOP Agreement
“CCOP Agreement”	an agreement entered into between (1) the Company and (2) CCHK
	relating to the sale and purchase of the registered capital in CCOP
“COB”	中海發展（北京）有限公司(Zhong Hai Development (Beijing)
	Ltd.), a company established in PRC, being an indirect wholly
	owned subsidiary of the Company
“COG”	中海發展（廣州）有限公司(COBD Holdings (Guangzhou)
	Company Limited), a company established in PRC, being an
	indirect wholly owned subsidiary of the Company
“COG Restructuring”	the transactions effected under the GCOP Agreement and the
	Lanwan Agreement
“Company”	China Overseas Land & Investment Limited (中國海外發展有限
	公司), a company incorporated in Hong Kong with limited liability,
	the shares of which are listed on the main board of the Stock
	Exchange
“connected person” or “associate”	the term “connected person” and “associate” shall have the
	meanings as defined in the Listing Rules
“COP”	中海地產股份有限公司(China Overseas Property Group Co.,
	Ltd.), a Sino-foreign joint venture company established in PRC,
	the registered capital of which is owned as to 79% by COZG,
	11% by SCO and 10% by three independent PRC entities not
	connected with any of the directors, chief executive or substantial
	shareholders of the Company or any of its subsidiaries or any
	associate of any of them

DEFINITIONS

“COP Group” COP and its subsidiaries “COP Group Restructuring” the transactions effected under the CCOP Agreement, the SCOP Agreement, the Guo Run Agreement, the Seagarden Agreement, the Tiancheng Agreement, the Yorkley Agreement and the BCOHT Agreement

“COPM” 中海物業管理（廣州）有限公司 (China Overseas Property Management (Guangzhou) Company Limited), a company established in PRC, being a subsidiary of the Company. The registered capital of COPM was held as to 90% by COG. The remaining 10% registered capital of COPM, which was contributed by COG, was held in the name of a subsidiary owned by SCO on behalf of COG

“COZG” 中國海外興業有限公司 (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 PRC, being the ultimate controlling shareholder of the Company “Director(s)” the directors of the Company “EGM” the Extraordinary General Meeting of the Company to be held at 30th Floor, China Overseas Building, 139 Hennessy Road, Wanchai, Hong Kong at 10:00 a.m. on Friday, 30 January 2004 at which an ordinary resolution will be proposed to approve the Restructuring, the Agreements and the transactions contemplated thereunder, the notice of which is set out at the end of this circular “Gain Direct” Gain Direct Limited, a company incorporated in the British Virgin Islands, being an indirect wholly owned subsidiary of the Company “GCOP” 廣州中海地產有限公司 (Guangzhou China Overseas Property Company Limited), a company established in PRC, the registered capital of which is owned as to 90% by COP and 10% by SCOP immediately before the completion of the GCOP Agreement “GCOP Agreement” an agreement entered into between (1) COP (2) SCOP (3) COG and (4) COPM relating to the sale and purchase of the registered capital in, and the shareholders’ loans in relation to, GCOP “Group” the Company and its subsidiaries (including the COP Group)

DEFINITIONS

“Guangzhou Lanwan” 廣州藍灣房地產開發有限公司 (Guangzhou Lanwan Property Development Ltd., formerly known as 廣州市番禺新囱源房地產開發有限公司 ), a company established in PRC, the registered capital of which is owned as to 90% by COP and 10% by SCOP immediately before the completion of the Lanwan Agreement
“Guo Run Agreement” an agreement entered into between (1) Beijing Xingye (2) COP relating to the sale and purchase of the registered capital of, and shareholder’s loan in relation to, Beijing Guo Run
“HK$” Hong Kong dollars, the lawful currency of Hong Kong “IFA” Yu Ming Investment Management Limited, the independent financial adviser to the Independent Board Committee
“Independent Board Committee” an independent committee of the Board comprising Dr. Li Kwok Po, David, Mr. Lam Kwong Siu and Mr. Wong Ying Ho, Kennedy, all of whom are independent non-executive directors of the Company
“Independent Shareholders” shareholders of the Company other than CSCEC and its associates (as the term is defined in the Listing Rules)
“Independent Valuer” DTZ Debenham Tie Leung Limited, an independent firm of valuer “Lanwan Agreement” an agreement entered into between (1) COP (2) SCOP (3) COG and (4) COPM relating to the sale and purchase of the registered capital in, and the shareholders’ loans in relation to, Guangzhou Lanwan
“Latest Practicable Date” 9 January 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
“Listing Rules” The Rules Governing the Listing of Securities on the Stock Exchange
“NTA” the book value of the net tangible asset of the Group as disclosed in the latest published consolidated accounts
“PRC” The People’s Republic of China “Property Development Group” a group of the Company’s subsidiaries (including COG and COPM) but other than the COP Group, which will engage in property development and investment in PRC after the Restructuring
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DEFINITIONS

“Restructuring”
“RMB”
“SCO”
“SCOP”
“SCOP Agreement”
“Seagarden Agreement”
“SFO”
“Stock Exchange”
“Tiancheng Agreement”
“US$”

the restructuring of the Group’s property development and investment operations in PRC as contemplated by the COP Group Restructuring and the COG Restructuring

Renminbi, the lawful currency of PRC

深圳市中海投資管理有限公司 (Shenzhen China Overseas Investment Management Co., Ltd.), a company established in PRC, being a direct subsidiary owned by CSCEC as to 95%
深圳中海地產有限公司 (Shenzhen China Overseas Property Company Limited), a company established in PRC, the registered capital of which is owned as to 75% by COP and 25% by COZG immediately before the completion of the SCOP Agreement
an agreement entered into between (1) COZG and (2) CCHK relating to the sale and purchase of the registered capital in, and the shareholders’ loans in relation to, SCOP
an agreement entered into between (1) COB (2) Beijing Xingye and (3) COP relating to the sale and purchase of the registered capital in, and the shareholders’ loans in relation to, Beijing Seagarden
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

The Stock Exchange of Hong Kong Limited

an agreement entered into between (1) Beijing Xingye (2) COB (3) COP and (4) CCHK relating to the sale and purchase of the registered capital of, and the shareholders’ loans in relation to, Beijing Tiancheng
United States dollars, the lawful currency of the United States of America
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DEFINITIONS

“Yorkley Agreement” “%” per cent.

a sale and purchase agreement entered into between (1) COZG and (2) CCHK relating to the sale and purchase of the entire issued share capital in Gain Direct, and the shareholder’s loan in relation to Gain Direct and its subsidiaries

For reference purpose only (i) the conversion of Renminbi to Hong Kong dollars is based on the exchange rate of HK$1.00 to RMB1.06 (ii) the conversion of United States dollars to Hong Kong dollars is based on the exchange rate of US$1.00 to HK$7.80.

Unless otherwise stated, financial information relating to CCOP, SCOP, Beijing Guo Run, Beijing Seagarden, Beijing Tiancheng, BCOHT, GCOP and Guangzhou Lanwan are prepared in accordance with generally accepted accounting principles in the PRC and translated into Hong Kong dollars adopting the above exchange rate. Financial information relating to the Group, the Company and Gain Direct are prepared in accordance with generally accepted accounting principles in Hong Kong.

LETTER FROM THE BOARD

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(incorporated in Hong Kong with limited liability)

Directors: Sun Wen Jie (Chairman) Kong Qingping (Vice Chairman and Chief Executive) Yao Peifu (Vice Chairman) Yao Xiancheng (Vice Chairman) Cui Duosheng Cheung Shiu Kit Wu Jianbin Yip Chung Nam Nip Yun Wing

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

Independent Non-Executive Directors:

Dr. Li Kwok Po, David O.B.E., J.P. Mr. Lam Kwong Siu Mr. Wong Ying Ho, Kennedy

14 January 2004

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTIONS

RESTRUCTURING OF THE GROUP’S PROPERTY DEVELOPMENT AND INVESTMENT OPERATIONS IN PRC

INTRODUCTION

The Board announced on 23 December 2003 that, the Group has entered into various agreements to carry out the Restructuring on 23 December 2003, comprising:

(a) the COP Group Restructuring – COP (COP, being a 79% owned subsidiary of the Group) and its subsidiaries, collectively referred to as the “ COP Group ”, will acquire certain property development and investment operations in Changchun, Shenzhen, Nanjing and Beijing, PRC from wholly owned subsidiaries of the Group and from SCO, a 95% subsidiary of CSCEC, the Company’s controlling shareholder.
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LETTER FROM THE BOARD

(b) the COG Restructuring – COG, a wholly owned subsidiary of the Group and, COPM, a subsidiary of COG (both being a member of a group of the Company’s subsidiaries other than the COP Group, which will engage in property development and investment in PRC after the Restructuring, such group of subsidiaries will be referred to as the “ Property Development Group ”), will acquire certain property development and investment operations in Guangzhou, PRC from the COP Group.

In relation to the COP Group Restructuring:

(1) the Company and CCHK entered into the CCOP Agreement whereby the Company agreed to dispose of its 25% interest in the registered capital of CCOP to CCHK for an initial consideration (subject to adjustment) of approximately RMB1,770,000 (approximately HK$1,670,000).
(2) COZG and CCHK entered into the SCOP Agreement whereby COZG agreed to dispose of its 25% interest in the registered capital of, and all related shareholder’s loan in relation to, SCOP to CCHK for an initial aggregate consideration (subject to adjustment) of approximately RMB58,482,000 (approximately HK$55,172,000).
(3) Beijing Xingye and COP entered into the Guo Run Agreement whereby Beijing Xingye agreed to dispose of its 75% interest in the registered capital in, and all related shareholder’s loan in relation to, Beijing Guo Run to COP for an aggregate initial consideration (subject to adjustment) of approximately RMB227,980,000 (approximately HK$215,075,000).
(4) COB, Beijing Xingye and COP entered into the Seagarden Agreement whereby COB and Beijing Xingye agreed to dispose of their collective 72% interest in the registered capital of, and all related shareholders’ loans in relation to, Beijing Seagarden to COP for an aggregate initial consideration (subject to adjustment) of approximately RMB57,585,000 (approximately HK$54,325,000).
(5) Beijing Xingye, COB, COP and CCHK entered into the Tiancheng Agreement whereby Beijing Xingye and COB agreed to dispose of their collective 100% interest in the registered capital of, and all related shareholders’ loans in relation to, Beijing Tiancheng to COP and CCHK respectively for an aggregate initial consideration (subject to adjustment) of approximately RMB165,568,000 (approximately HK$156,196,000).
(6) COZG and CCHK entered into the Yorkley Agreement whereby COZG agreed to sell the entire issued share capital in Gain Direct, and all related shareholder’s loan in relation to Gain Direct and its subsidiaries for an aggregate initial consideration (subject to adjustment) of approximately RMB85,581,000 (approximately HK$80,737,000) to CCHK.
(7) SCO and COP entered into the BCOHT Agreement whereby COP agreed to acquire 30% interest in the registered capital of BCOHT from SCO for an aggregate initial consideration (subject to adjustment) of approximately RMB4,908,000 (approximately HK$4,631,000).
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LETTER FROM THE BOARD

In relation to the COG Restructuring:

(8) COP, SCOP, COG and COPM entered into the GCOP Agreement whereby COG and COPM respectively agreed to acquire 90% and 10% interest in the registered capital of, and all related shareholders’ loans in relation to, GCOP from COP and SCOP for an aggregate initial consideration (subject to adjustment) of approximately RMB40,876,000 (approximately HK$38,562,000).
(9) COP, SCOP, COG and COPM entered into the Lanwan Agreement whereby COG and COPM respectively agreed to acquire 90% and 10% interest in the registered capital of, and all related shareholders’ loans in relation to, Guangzhou Lanwan from COP and SCOP for an aggregate initial consideration (subject to adjustment) of approximately RMB96,421,000 (approximately HK$90,963,000).

(the CCOP Agreement, the SCOP Agreement, the Guo Run Agreement, the Seagarden Agreement, the Tiancheng Agreement, the Yorkley Agreement, the BCOHT Agreement, the GCOP Agreement, the Lanwan Agreement are collectively referred to as the “ Agreements ”).

COP is held as to 11% by SCO, a 95 per cent. owned subsidiary of CSCEC, the controlling shareholder of the Company. Transactions between wholly owned subsidiaries of the Group and the COP Group, and between the COP Group and SCO and COPM constitute connected transactions of the Group under the Listing Rules. The aggregate initial consideration of the COP Group Restructuring and of the COG Restructuring represent about 7.34 per cent. and 1.67% of the Group’s NTA respectively.

The Restructuring and the transactions thereunder constitute connected transactions of the Company under the Listing Rules, and is subject to the approval of the Independent Shareholders of the Company in an extraordinary general meeting. An independent board committee will be appointed to advise the Independent Shareholders on the Restructuring.

The purposes of this circular are to provide you with further information relating to the Restructuring, the Agreements and the transactions contemplated thereunder, to set out the letter of advice from the IFA, the recommendation and opinion of the Independent Board Committee, the valuation report of the Independent Valuer regarding the underlying properties subject to the Restructuring and to seek your approval at the EGM of the ordinary resolution in relation to the Restructuring, the Agreements and the transactions contemplated thereunder.

LETTER FROM THE BOARD

THE AGREEMENTS

1. THE CCOP AGREEMENT

Date: 23 December 2003

Parties

(1) the Company, legally and beneficially interested in CCOP as to 25% of its registered capital, as vendor; and
(2) CCHK, a direct wholly owned subsidiary of COP, as purchaser.

Asset Disposed of by the Company to the COP Group

The Company agreed to dispose of its 25% interest in the registered capital in CCOP to CCHK. Upon completion, all the rights and liabilities arising on and after 1 November 2003 in respect of the 25% registered capital in CCOP shall be deemed to belong to and be borne by CCHK.

Consideration

The initial consideration of approximately RMB1,770,000 (approximately HK$1,670,000) in respect of the 25% interest in the registered capital in CCOP (subject to adjustment as set out below) was determined by reference to the unaudited net asset value of CCOP attributable to 25% of CCOP’s registered capital as at 31 October 2003 of RMB1,093,000 (approximately HK$1,031,000), plus a premium taking into account the valuation of the underlying property interests as at 31 October 2003 by the Independent Valuer and the unaudited book value in relation to such underlying property interests as of 31 October 2003 of RMB142,290,000 (approximately HK$134,236,000).

The consideration will be adjusted before completion to reflect the net asset value of CCOP attributable to 25% of CCOP’s registered capital and the book value in relation to such underlying property interests audited as of 31 October 2003. The consideration (as adjusted) shall be fully paid by CCHK in cash on completion of the CCOP Agreement.

The consideration was arrived at after arm’s length negotiations between the parties, and will be financed out of internal resources and existing banking facilities of the COP Group. The sale proceeds will be retained by the Group as general working capital.

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LETTER FROM THE BOARD

Condition and Completion

Completion of the CCOP Agreement is conditional upon the Independent Shareholders approving the Restructuring and such other matters as may be required by the Stock Exchange at an extraordinary general meeting of the Company, and will take place within 21 days after the condition has been fulfilled.

In the event that the above condition is not fulfilled on or before 31 March 2004 (or such other later date as the parties may agree), the CCOP Agreement will lapse. Completion of the CCOP Agreement is not conditional upon completion of the other Agreements.

Immediately after the completion of the CCOP Agreement, CCOP will become a wholly owned subsidiary of the COP Group.

Information on CCOP

CCOP was established in PRC in December 2002 with a total registered capital of RMB10,000,000 (approximately HK$9,434,000) fully paid up as to 25% by the Company and 75% by COP.

The unaudited net asset value of CCOP as at 31 October 2003 is RMB4,372,000 (approximately HK$4,125,000). The unaudited loss of CCOP for the period from the date of its establishment to 31 October 2003 is as follows:

Loss before/after tax

Period ended 31.10.2003 (Unaudited) RMB (5,702,000)

The principal activities of CCOP are property development and management in PRC. Its principal asset is the holding of the first phase of a commercial and residential development project currently known as 水岸春城 (Zhong Hai Shui An Chun Cheng) (the “ CCOP Project ”) situating in Changchun, PRC. The entire CCOP Project has a planned development area of 1,000,000 square metres. The land use rights of about 200,000 square metres of land for this first phase was obtained in May 2003. The construction work for this first phase of the CCOP Project is currently under way and when completed, is expected to comprise low-rise residential buildings. After the Restructuring, COP Group will be responsible to arrange finance for CCOP’s projects and business activities. Other than shareholder’s advances made by COP and construction costs incurred in its normal course of business, CCOP has no other material liabilities.

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LETTER FROM THE BOARD

Relationship between the Connected Parties

CCHK is a direct wholly owned subsidiary of COP, the substantial shareholder of which is SCO, an associate of CSCEC. The CCOP Agreement therefore constitutes a connected transaction of the Company under the Listing Rules.

2. THE SCOP AGREEMENT

Date: 23 December 2003

Parties

(1) COZG, an indirect wholly owned subsidiary of the Company, legally and beneficially interested in SCOP as to 25% of its registered capital, as vendor; and
(2) CCHK, a direct wholly owned subsidiary of COP, as purchaser.

Asset Disposed of by a wholly owned subsidiary of the Group to the COP Group

COZG agreed to dispose of its 25% interest in the registered capital in SCOP, and all related shareholder’s loan in relation to SCOP (such loan being non-interest bearing), to CCHK. Upon completion, all the rights and liabilities arising on and after 1 November 2003 in respect of the 25% registered capital in SCOP and the shareholder’s loan shall be deemed to belong to and be borne by CCHK.

Consideration

The initial consideration of approximately RMB58,482,000 (approximately HK$55,172,000) comprises the following (subject to adjustment as set out below):

(a) approximately RMB31,732,000 (approximately HK$29,936,000), the consideration in respect of the 25% interest in the registered capital in SCOP determined by reference to the unaudited net asset value of SCOP attributable to 25% of SCOP’s registered capital as at 31 October 2003 of RMB22,916,000 (approximately HK$21,619,000), plus a premium taking into account the valuation of underlying property interests as at 31 October 2003 by the Independent Valuer, the estimated initial development cost (being the cost of the site clearance work) for the underlying properties, the unaudited book value and/or the actual cost paid by SCOP in relation to such underlying properties as of 31 October 2003; and
(b) approximately RMB26,750,000 (approximately HK$25,236,000), the consideration in respect of the shareholders’ loans, being the face value of the loan as at 31 October 2003.
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LETTER FROM THE BOARD

The consideration will be adjusted before completion to reflect the audited net asset value of SCOP attributable to 25% of SCOP’s registered capital, the book value and/or the actual cost paid by SCOP of the underlying interests as of 31 October 2003 and the face value of the shareholder’s loan as of completion. The consideration (as adjusted) shall be fully paid by CCHK in cash on completion of the SCOP Agreement.

Condition and Completion

Completion of the SCOP Agreement is conditional upon the Independent Shareholders approving the Restructuring and such other matters as may be required by the Stock Exchange at an extraordinary general meeting of the Company, and will take place within 21 days after the condition has been fulfilled.

In the event that the above condition is not fulfilled on or before 31 March 2004 (or such other later date as the parties may agree), the SCOP Agreement will lapse. Completion of the SCOP Agreement is not conditional upon completion of the other Agreements.

Immediately after the completion of the SCOP Agreement, SCOP will become a wholly owned subsidiary of the COP Group.

Information on SCOP

SCOP was established in PRC in April, 1997 with a total registered capital in HK$50,000,000 fully paid up as to 25% by COZG and 75% by COP.

The audited net asset value of SCOP for the year ended 31 December 2002 was RMB57,150,000 (approximately HK$53,915,000). The audited profits before and after tax of SCOP for the past two financial years are as follows:

	Year ended	Year ended
	31.12.2001	31.12.2002
	(Audited)	(Audited)
	RMB	RMB
Profit before tax	2,155,000	2,188,000
Profit after tax	1,831,000	1,867,000

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LETTER FROM THE BOARD

The principal activity of SCOP is property development and investment holding in PRC. Its principal assets are (i) a 20% equity interest in 南京中海地產有限公司 (Nanjing China Overseas Property Company Limited) (“ NJCOP ”); (ii) properties in existing commercial and residential buildings in Shenzhen, namely, 中海華庭 (Dynasty Court) (the “ Dynasty Court ”) 深圳中海大廈 (Shenzhen China Overseas Building) (the “ Shenzhen China Overseas Building ”) and Vista Height; (iii) a residential and commercial development project currently identified as 橫崗項目 (Henggang Project) (the “ SCOP Project ”) situate in Shenzhen, PRC; and (iv) a 20% equity interest in BCOP. After the Restructuring, COP Group will be responsible to arrange finance for SCOP’s projects and business activities.

NJCOP

NJCOP was established in PRC in May 2003 with a total registered capital of RMB20,000,000 (approximately HK$18,868,000) fully contributed as to 80% by COP and 20% by SCOP to engage in property development and management in Nanjing, PRC. It has not yet commenced any active business and has no property interest.

Dynasty Court, Shenzhen China Overseas Building and Vista Height

SCOP’s property holdings in Shenzhen comprises:

(a) carparks at Dynasty Court;
(b) a retail level with gross floor area of about 1,000 square metres and office spaces of about 7,950 square metres, at Shenzhen China Overseas Building; and
(c) a residential unit with gross floor area of about 120 square metres at Vista Height.

These properties are either vacant, or leased to tenants or occupied by SCOP. The aggregate unaudited book value for the property interests in Dynasty Court, Shenzhen China Overseas Building and Vista Height is RMB85,197,000 (approximately HK$80,375,000) as of 31 October 2003.

The SCOP Project

The SCOP Project has a total gross area of about 219,350 square metres, and is currently a vacant site comprising 3 plots of land situated in Longgang District, Shenzhen, PRC. The site is expected to be developed into a residential compound. Construction work for the project has not yet commenced.

The estimated initial development cost (being the cost of the site clearance work) for the project is expected to be approximately RMB118,950,000 (approximately HK$112,217,000).

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LETTER FROM THE BOARD

3. THE GUO RUN AGREEMENT

BCOP

The principal activities of BCOP are property development and investment holding in PRC. Its principal assets comprises (i) a 70% equity interest in BCOHT (further information relating to BCOHT are set out in the section under the BCOHT Agreement in this letter below); and (ii) a residential and commercial development project currently known as 中海馥園 (Zhong Hai Fu Yuan) (the “ BCOP Project ”) situated in Beijing, PRC with a gross floor area of about 28,951.77 square metres. The development of the BCOP Project has been completed. The BCOP Project has an unaudited book value of RMB208,125,000 (approximately HK$196,344,000) as of 31 October 2003.

Relationship between the Connected Parties

CCHK is a direct wholly owned subsidiary of COP, the substantial shareholder of which is SCO, an associate of CSCEC. The SCOP Agreement therefore constitutes a connected transaction of the Company under the Listing Rules.

Date: 23 December 2003

Parties

(1) Beijing Xingye, an indirect wholly owned subsidiary of the Company, legally and beneficially interested in Beijing Guo Run as to 75% of its registered capital, as vendor; and
(2) COP, as purchaser.

The remaining 25% equity interest of Beijing Guo Run is owned by an independent third party which other than its interest in Beijing Guo Run is unrelated to any director, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associate.

Asset Disposed of by a wholly owned subsidiary of the Group to the COP Group

Beijing Xingye agreed to dispose of its 75% interest in the registered capital in Beijing Guo Run, and all related shareholder’s loan in relation to Beijing Guo Run (such loan being noninterest bearing), to COP. Upon completion, all the rights and liabilities arising on and after 1 November 2003 in respect of the 75% registered capital in Beijing Guo Run and the shareholder’s loan shall be deemed to belong to and be borne by COP.

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LETTER FROM THE BOARD

Consideration

The initial aggregate consideration of approximately RMB227,980,000 (approximately HK$215,075,000) comprises the following (subject to adjustment as set out below):

(a) approximately RMB27,980,000 (approximately HK$26,396,000), the consideration in respect of the 75% interest in the registered capital in Beijing Guo Run, determined by reference to the unaudited net asset value of Beijing Guo Run attributable to 75% of Beijing Guo Run’s registered capital as at 31 October 2003 of RMB22,280,000 (approximately HK$21,019,000), plus a premium taking into account the valuation of the underlying property interests as at 31 October 2003 by the Independent Valuer, the estimated initial development cost (being the cost of the site clearance work) and the actual cost paid by Beijing Guo Run in relation to such underlying property; and
(b) approximately RMB200,000,000 (approximately HK$188,679,000), the consideration in respect of the shareholder’s loan, being the face value of the loan as at 31 October 2003.

The consideration will be adjusted before completion in order to reflect the net asset value of Beijing Guo Run attributable to the 75% of Beijing Guo Run’s registered capital and the actual cost paid by Beijing Guo Run audited as of 31 October 2003 and the face value of the shareholder’s loan as of completion. The consideration (as adjusted) shall be fully paid by COP in cash on completion of the Guo Run Agreement.

Conditions and Completion

Completion of the Guo Run Agreement is conditional on the following conditions, and will take place within 21 days after such conditions have been fulfilled:

(a) the Independent Shareholders approving the Restructuring and such other matters as may be required by the Stock Exchange at an extraordinary general meeting of the Company; and
(b) the holder of the remaining 25% equity interest of Beijing Guo Run consenting to, or waiving any right of first refusal in respect of, the transactions contemplated under the Guo Run Agreement.

In the event that the above conditions are not fulfilled on or before 31 March 2004 (or such other later date as the parties may agree), the Guo Run Agreement will lapse. Completion of the Guo Run Agreement is not conditional upon completion of the other Agreements.

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LETTER FROM THE BOARD

Immediately after the completion of the Guo Run Agreement, Beijing Guo Run will become a 75% owned subsidiary of the COP Group.

Information on Beijing Guo Run

Beijing Guo Run was established in PRC in July, 1999 with a total registered capital of RMB30,000,000 (approximately HK$28,302,000) fully paid up as to 75% by Beijing Xingye and 25% by an independent third party unrelated to any director, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associate.

The audited net asset value of Beijing Guo Run for the year ended 31 December 2002 was RMB29,931,000 (approximately HK$28,237,000). The audited profit/loss of Beijing Guo Run for the past two financial years are as follows:

	Year ended	Year ended
	31.12.2001	31.12.2002
	(Audited)	(Audited)
	RMB	RMB
Loss before/after tax	0	(69,000)

The principal activity of Beijing Guo Run is property development in Beijing, PRC. Its principal asset is a plot of land situated in Chaoyang District, Beijing, PRC with a total area of about 19,183 square metres. The site is expected to be developed into a composite compound. Construction work for the project has not yet commenced. After the Restructuring, COP Group will be responsible to arrange finance for Beijing Guo Run’s projects and business activities.

The estimated initial development cost (being the cost of the site clearance work) for the project is expected to be approximately RMB660,000,000 (approximately HK$622,642,000).

Relationship between the Connected Parties

COP is an indirect non-wholly owned subsidiary of the Company and the substantial shareholder of which is SCO, an associate of CSCEC. The Guo Run Agreement therefore constitutes a connected transaction of the Company under the Listing Rules.

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LETTER FROM THE BOARD

4. THE SEAGARDEN AGREEMENT

Date: 23 December 2003

Parties

(1) COB, an indirect wholly owned subsidiary of the Company, legally and beneficially interested in Beijing Seagarden as to 67% of its registered capital, as vendor;
(2) Beijing Xingye, an indirect wholly owned subsidiary of the Company, legally and beneficially interested in Beijing Seagarden as to 5% of its registered capital, as vendor; and
(3) COP, an indirect non-wholly owned subsidiary of the Company, as purchaser.

The remaining 28% equity interest of Beijing Seagarden is owned by an independent third party which other than its interest in Beijing Seagarden is unrelated to any director, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associate.

Asset Disposed of by wholly owned subsidiaries of the Group to the COP Group

COB and Beijing Xingye agreed to dispose of their respective 67% and 5% interest in the registered capital in Beijing Seagarden, and all related shareholders’ loans in relation to Beijing Seagarden (such loans being non-interest bearing), to COP. Upon completion, all the rights and liabilities arising on and after 1 November 2003 in respect of the 72% registered capital in Beijing Seagarden and the shareholders’ loans shall be deemed to belong to and be borne by COP.

Consideration

The initial aggregate consideration of approximately RMB57,585,000 (approximately HK$54,325,000) comprises the following (subject to adjustment as set out below):

(a) approximately RMB14,185,000 (approximately HK$13,382,000), the consideration in respect of the 72% interest in the registered capital in Beijing Seagarden, determined by reference to the unaudited net asset value of Beijing Seagarden attributable to 72% of Beijing Seagarden’s registered capital as at 31 October 2003 of RMB13,965,000 (approximately HK$13,175,000), plus a premium after taking into account the valuation of the underlying property interests as at 31 October 2003 by the Independent Valuer, the estimated initial development cost (being the cost of the site clearance work) and the actual cost paid by Beijing Seagarden in relation to such underlying property; and
(b) approximately RMB43,400,000 (approximately HK$40,943,000), the consideration in respect of the shareholders’ loans, being the face values of the loans as at 31 October 2003.
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LETTER FROM THE BOARD

The consideration will be adjusted before completion in order to reflect the net asset value of Beijing Seagarden attributable to the 72% of Beijing Seagarden’s registered capital and the actual cost paid by Beijing Seagarden audited as of 31 October 2003 and the face value of the shareholders’ loans as of completion. The consideration (as adjusted) shall be fully paid by COP in cash on completion of the Beijing Seagarden Agreement.

Conditions and Completion

Completion of the Seagarden Agreement is conditional upon the following conditions, and will take place within 21 days after such conditions have been fulfilled:

(a) the Independent Shareholders approving the Restructuring and such other matters as may be required by the Stock Exchange at an extraordinary general meeting of the Company; and
(b) the holder of the remaining 28% equity interest of Beijing Seagarden consenting to, or waiving any right of first refusal in respect of, the transactions contemplated under the Seagarden Agreement.

In the event that the above conditions are not fulfilled on or before 31 March 2004 (or such other later date as the parties may agree), the Seagarden Agreement will lapse. Completion of the Seagarden Agreement is not conditional upon completion of the other Agreements.

Immediately after the completion of the Seagarden Agreement, Beijing Seagarden will become a non-wholly owned subsidiary of the COP Group.

Information on Beijing Seagarden

Beijing Seagarden was established in PRC on September 2002 with a total registered capital of US$11,920,000 (approximately HK$92,976,000), in which 19.69% (being US$2,347,000 or approximately HK$18,307,000) was contributed as to 67% by COB, 5% by Beijing Xingye and 28% by the remaining independent third party. The remaining capital in Beijing Seagarden is required to be contributed by September 2005 by its shareholders in proportion to their then shareholdings.

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LETTER FROM THE BOARD

The unaudited net shareholders deficit of Beijing Seagarden for the year ended 31 December 2002 was RMB656 (approximately HK$619). The unaudited loss of Beijing Seagarden for the year ended 31 December 2002 is as follows:

Year ended 31.12.2002 (unaudited) RMB Loss before/after tax (656)

The principal activities of Beijing Seagarden are development, construction and sale of low density residential units and related facilities in PRC. Its principal asset is a plot of land situated at Changping District, Beijing, PRC with a total area of about 630,000 square metres. The site is expected to be developed into a villa/low-rise apartment residential compound. Construction work for the project has not yet commenced. After the Restructuring, COP Group will be responsible to arrange finance for Beijing Seagarden’s projects and business activities.

The estimated initial development cost (being the cost of the site clearance work) for the project is expected to be approximately RMB338,460,000 (approximately HK$319,302,000).

Relationship between the Connected Parties

COP is an indirect non-wholly owned subsidiary of the Company and the substantial shareholder of which is SCO, an associate of CSCEC. The Seagarden Agreement therefore constitutes a connected transaction of the Company under the Listing Rules.

THE TIANCHENG AGREEMENT

Date: 23 December 2003

Parties

(1) Beijing Xingye, an indirect wholly owned subsidiary of the Company, legally and beneficially interested in Beijing Tiancheng as to 49% of its registered capital, as vendor;
(2) COB, an indirect wholly owned subsidiary of the Company, legally and beneficially interested in Beijing Tiancheng as to 51% of its registered capital, as vendor;
(3) COP, an indirect non-wholly owned subsidiary of the Company, as purchaser; and
(4) CCHK, a direct wholly owned subsidiary of COP, as purchaser.
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LETTER FROM THE BOARD

Asset Disposed of by wholly owned subsidiaries of the Group to the COP Group

Beijing Xingye and COB agreed to dispose of their collective 100% interest in the registered capital in Beijing Tiancheng, and all their related shareholders’ loans in relation to Beijing Tiancheng (such loan being non-interest bearing), to COP and CCHK.

COP agreed to take up 75% interest in the registered capital in Beijing Tiancheng (as to 49% from Beijing Xingye and 26% from COB), and all their related shareholders’ loans in relation to Beijing Tiancheng and CCHK agreed to take up the remaining 25% of the registered capital from COB and the corresponding share of the shareholder’s loan. Upon completion, all the rights and liabilities arising on and after 1 November 2003 in respect of the entire registered capital in Beijing Tiancheng and the shareholders’ loans shall be deemed to belong to and be borne by COP and CCHK in proportion to their respective shareholdings in Beijing Tiancheng.

Consideration

The initial aggregate consideration of approximately RMB165,568,000 (approximately HK$156,196,000) comprises the following (subject to adjustment as set out below):

(a) approximately RMB15,568,000 (approximately HK$14,687,000), the consideration in respect of the entire interest in the registered capital in Beijing Tiancheng, determined by reference to the unaudited net asset value of Beijing Tiancheng as at 31 October 2003 of RMB14,556,000 (approximately HK$13,732,000), plus a premium taking into account the valuation of the underlying property interests as at 31 October 2003 by the Independent Valuer, the estimated initial development cost (being the cost of the site clearance work) and the actual cost paid by Beijing Tiancheng in relation to such underlying property; and
(b) approximately RMB150,000,000 (approximately HK$141,509,000), the consideration in respect of the shareholders’ loans, being the face value of the loans as at 31 October 2003.

The consideration will be adjusted before completion to reflect the net asset value of Beijing Tiancheng and the actual cost paid by Beijing Tiancheng audited as of 31 October 2003 and the face value of the shareholders’ loans as of completion. The consideration (as adjusted) shall be fully paid to Beijing Xingye and COB respectively in cash on completion of the Tiancheng Agreement.

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LETTER FROM THE BOARD

Condition and Completion

Completion of the Tiancheng Agreement is conditional upon the Independent Shareholders approving the Restructuring and such other matters as may be required by the Stock Exchange at an extraordinary general meeting of the Company, and will take place within 21 days after the condition has been fulfilled.

In the event that the above condition is not fulfilled on or before 31 March 2004 (or such other later date as the parties may agree), the Tiancheng Agreement will lapse. Completion of the Tiancheng Agreement is not conditional upon completion of the other Agreements.

Immediately after the completion of the Tiancheng Agreement, Beijing Tiancheng will become a wholly owned subsidiary of the COP Group.

Information on Beijing Tiancheng

Beijing Tiancheng was established in PRC in March 2003 with a total registered capital of US$12,000,000 (approximately HK$93,600,000), in which 15% (being US$1,800,000 or approximately HK$14,040,000) has been contributed. The remaining capital in Beijing Tiancheng is required to be contributed by March 2006 by its shareholders in proportion to their then shareholdings.

The unaudited net asset value of Beijing Tiancheng as at 31 October 2003 is RMB14,556,000 (approximately HK$13,732,000). The unaudited loss of Beijing Tiancheng for the period commencing from the date of its incorporation to 31 October 2003 is as follows:

	Period ended
	31.10.2003
	(unaudited)
	RMB
Loss before/after tax	(332,330)

The principal activities of Beijing Tiancheng are construction and sale of buildings in Haidian District in Beijing, PRC. Its principal asset is a plot of land situated at Haidian District, Beijing, PRC with a total area of about 96,600 square metres. The site is expected to be developed into a residential compound. Construction work for the project has not yet commenced. After the Restructuring, COP Group will be responsible to arrange finance for Beijing Tiancheng’s projects and business activities.

The estimated initial development cost (being the cost of the site clearance work) for the project is expected to be approximately RMB298,800,000 (approximately HK$281,887,000).

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LETTER FROM THE BOARD

6. THE YORKLEY AGREEMENT

Relationship between the Connected Parties

CCHK is a direct wholly owned subsidiary of COP, the substantial shareholder of which is SCO, an associate of CSCEC. The Tiancheng Agreement therefore constitutes a connected transaction of the Company under the Listing Rules.

Date: 23 December 2003

Parties

(1) COZG, an indirect wholly owned subsidiary of the Company, legally and beneficially interest in the entire issued share capital of Gain Direct, as vendor; and
(2) CCHK, a direct wholly owned subsidiary of COP, as purchaser.

Asset Disposed of by a wholly owned subsidiary of the Group to the COP Group

COZG agreed to dispose of one share of US$1.00 each of Gain Direct, representing the entire issued share capital in Gain Direct, and all the related shareholders’ loans in relation to Gain Direct and its subsidiaries (such loans being non-interest bearing), to CCHK. Upon completion, all the rights and liabilities arising on and after 1 November 2003 in respect of the entire issued share capital in Gain Direct and the shareholders’ loans shall be deemed to belong to and be borne by CCHK.

Consideration

The initial aggregate consideration of approximately RMB85,581,000 (approximately HK$80,737,000) comprises the following (subject to adjustment as set out below):

(a) HK$1, the consideration in respect of the entire issued share capital in Gain Direct, determined by reference to the unaudited consolidated net deficit of Gain Direct of RMB16,893,000 (approximately HK$15,937,000) as at 31 October 2003, but after taking into account the valuation of the underlying property interests as at 31 October 2003 by the Independent Valuer, the estimated initial development cost (being the cost of the site clearance work) and the actual cost paid by Gain Direct and its subsidiaries in relation to such underlying property; and
(b) approximately RMB85,581,000 (approximately HK$80,737,000), the consideration in respect of the shareholders’ loans, being the face value of the loans as at 31 October 2003.
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LETTER FROM THE BOARD

The consideration will be adjusted before completion to reflect the consolidated net deficit of Gain Direct and the actual cost paid by Gain Direct and its subsidiaries in relation to the underlying property interest audited as of 31 October 2003, and the face value of the shareholders’ loans as of completion. The consideration (as adjusted) shall be fully paid by COP in cash on completion of the Yorkley Agreement.

Condition and Completion

Completion of the Yorkley Agreement is conditional upon the Independent Shareholders approving the Restructuring and such other matters as may be required by the Stock Exchange at an extraordinary general meeting of the Company, and will take place within 21 days after the condition has been fulfilled.

In the event that the above condition is not fulfilled on or before 31 March 2004 (or such other later date as the parties may agree), the Yorkley Agreement will lapse. Completion of the Yorkley Agreement is not conditional upon completion of the other Agreements.

Immediately after the completion of the Yorkley Agreement, Gain Direct will become a wholly owned subsidiary of the COP Group.

Information on Gain Direct

Gain Direct was incorporated in the British Virgin Islands in August 2002. The audited shareholders deficit of Gain Direct for the year ended 31 December 2002 was HK$5,452. The audited loss of Gain Direct for period commencing from its date of incorporation to 31 December 2002 is as follows:

Loss before/after tax

Period ended 31.12.2002 (Audited) HK$ (5,460)

Gain Direct is an investment holding company. Its principal asset is the holding of 95% equity interest of Beijing Yorkley, the major assets of which is a plot of land situated at Chaoyang District, Beijing, PRC with a total area of about 501,400 square metres. The site is expected to be developed into a residential compound. Construction work for the project has not yet commenced. After the Restructuring, COP Group will be responsible to arrange finance for Gain Direct’s underlying projects and business activities.

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LETTER FROM THE BOARD

7. THE BCOHT AGREEMENT

The estimated initial development cost (being the cost of the site clearance work) for the project is expected to be approximately RMB370,419,000 (approximately HK$349,452,000).

Relationship between the Connected Parties

CCHK is a direct wholly owned subsidiary of COP, the substantial shareholder of which is SCO, an associate of CSCEC. The Yorkley Agreement therefore constitutes a connected transaction of the Company under the Listing Rules.

Date: 23 December 2003

Parties

(1) SCO, a direct non-wholly owned subsidiary of CSCEC, legally and beneficially interested in BCOHT as to 30%, as vendor; and
(2) COP, an indirect non-wholly owned subsidiary of the Company, as purchaser.

Asset Acquired by the COP Group from a connected person outside the Group

COP agreed to acquire 30% interest in the registered capital in BCOHT from SCO. Upon completion, all the rights and liabilities arising on and after 1 November 2003 in respect of the 30% registered capital in BCOHT shall be deemed to belong to and be borne by COP.

Consideration

The initial consideration of approximately RMB4,908,000 (approximately HK$4,631,000) (subject to adjustment as set out below) was determined by reference to the unaudited net asset value of BCOHT attributable to 30% of BCOHT’s registered capital as at 31 October 2003 of RMB1,008,000 (approximately HK$951,000), plus a premium taking into account the valuation of the underlying property interests by the Independent Valuer and the unaudited book value in relation to such underlying property interests as of 31 October 2003 of RMB617,000,000 (approximately HK$582,075,000).

The consideration will be adjusted before completion to reflect the net asset value of BCOHT attributable to the 30% of BCOHT’s registered capital and the book value of the underlying property interests audited as of 31 October 2003. The consideration (as adjusted) shall be fully paid by COP in cash on completion of the BCOHT Agreement.

The consideration was arrived at after arm’s length negotiations between the parties, and will be financed out of internal resources and existing banking facilities of the COP Group.

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LETTER FROM THE BOARD

Condition and Completion

Completion of the BCOHT Agreement is conditional upon the Independent Shareholders approving the Restructuring and such other matters as may be required by the Stock Exchange at an extraordinary general meeting of the Company, and will take place within 21 days after the condition has been fulfilled.

In the event that the above condition is not fulfilled on or before 31 March 2004 (or such other later date as the parties may agree), the BCOHT Agreement will lapse. Completion of the BCOHT Agreement is not conditional upon completion of the other Agreements.

Immediately after the completion of the BCOHT Agreement, BCOHT will become a wholly owned subsidiary of the COP Group.

Information on BCOHT

BCOHT was established in PRC in December 2000 with a total registered capital of RMB10,000,000 (approximately HK$9,434,000) all of which has been paid up in full.

The audited net asset value of BCOHT for the year ended 31 December 2002 was RMB8,400,000 (approximately HK$7,925,000). The audited loss of BCOHT for the past two financial years are as follows:

	Year ended	Year ended
	31.12.2001	31.12.2002
	(Audited)	(Audited)
	RMB	RMB
Loss before/after tax	(632,000)	(972,000)

The principal activity of BCOHT is property development in PRC. Its principal asset is the holding of a residential development project currently known as 中海凱旋 (Zhong Hai Kai Xuan) (the “ BCOHT Project ”) situating in Xicheng District, Beijing, PRC with a gross area of about 26,624 square metres. The construction work for the BCOHT Project is currently under way. After the Restructuring, COP Group will be responsible to arrange finance for BCOHT’s projects and business activities.

Relationship between the Connected Parties

SCO, being a direct non-wholly owned subsidiary of CSCEC, is an associate of the Company. The BCOHT Agreement therefore constitutes a connected transaction of the Company under the Listing Rules.

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LETTER FROM THE BOARD

In relation to the COG Restructuring, the following agreements were entered into by the Group:

8. THE GCOP AGREEMENT

Date: 23 December 2003

Parties

(1) COP, an indirect non-wholly owned subsidiary of the Company, legally and beneficially interested in GCOP as to 90% of its registered capital, as vendor;
(2) SCOP, a subsidiary of COP, legally and beneficially interested in GCOP as to 10% of its registered capital, as vendor;
(3) COG, an indirect wholly owned subsidiary of the Company, as purchaser; and
(4) COPM, an indirect subsidiary of the Company, as purchaser.

Asset Acquired by the Group from the COP Group

COG and COPM respectively agreed to acquire 90% and 10% interest in the registered capital in GCOP, and all the related shareholders’ loans in relation to GCOP in proportion to their shareholdings (such loan being non-interest bearing and advanced by COP), from COP and SCOP. Upon completion, all the rights and liabilities arising on and after 1 November 2003 in respect of the registered capital in, and the shareholders’ loans in relation to, GCOP, shall be deemed to belong to and be borne by COG and COPM.

Consideration

The initial aggregate consideration of approximately RMB40,876,000 (approximately HK$38,562,000) comprises the following (subject to adjustment as set out below):

(a) approximately RMB19,876,000 (approximately HK$18,751,000), the consideration in respect of the 100% interest in the registered capital in GCOP, determined by reference to the unaudited net asset value of GCOP as at 31 October 2003 of RMB19,876,000 (approximately HK$18,751,000); and
(b) approximately RMB21,000,000 (approximately HK$19,811,000), the consideration in respect of the shareholders’ loans, being the face value of the loans as at 31 October 2003.

The consideration will be adjusted before completion in order to reflect the audited net asset value of GCOP’s registered capital as of 31 October 2003 and the face value of the shareholder’s loan as of completion.

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LETTER FROM THE BOARD

The consideration (as adjusted) in respect of the 90% and 10% interest in the registered capital of GCOP and the shareholders’ loans shall be paid by COG and COPM in proportion to their respective shareholdings in GCOP, in cash on completion of the GCOP Agreement.

The total consideration was arrived at after arm’s length negotiations between the parties, and will be financed out of internal resources and existing banking facilities of the Group. The sale proceeds will be retained by the COP Group as general working capital.

Condition and Completion

Completion of the GCOP Agreement is conditional upon the Independent Shareholders approving the Restructuring and such other matters as may be required by the Stock Exchange at an extraordinary general meeting of the Company, and will take place within 21 days after the condition has been fulfilled.

In the event that the above condition is not fulfilled on or before 31 March 2004 (or such later date as the parties may agree), the GCOP Agreement will lapse. Completion of the GCOP Agreement is not conditional upon completion of the other Agreements.

Immediately after the completion of the GCOP Agreement, GCOP will become a wholly owned subsidiary of the Company.

Information on GCOP

GCOP was established in PRC in January 1998 and has a total registered capital of RMB20,000,000 (approximately HK$18,868,000), all of which has been fully paid up.

The audited net asset value of GCOP for the year ended 31 December 2002 was RMB10,000,000 (approximately HK$9,434,000). GCOP has not yet commenced any active business since its establishment.

GCOP was established to engage in property development in PRC. GCOP has entered into agreements with a third party independent from the Group to secure the land use rights in respect of a plot of land situated at Dongshan District, Guangzhou, PRC with a total area of about 12,000 square metres for development as a residential compound. Discussions are still under way to formalise the arrangement for GCOP to obtain such rights, and accordingly no valuation was made in respect of the plot of land concerned. After the Restructuring, the Property Development Group will be responsible to arrange finance for GCOP’s business activities.

Relationship between the Connected Parties

COP is an indirect non-wholly owned subsidiary of the Company where SCO, an associate of CSCEC, is its substantial shareholder. The GCOP Agreement therefore constitutes a connected transaction of the Company under the Listing Rules.

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LETTER FROM THE BOARD

9. THE LANWAN AGREEMENT

Date: 23 December 2003

Parties

(1) COP, an indirect non-wholly owned subsidiary of the Company, legally and beneficially interested in Guangzhou Lanwan as to 90% of its registered capital, as vendor;
(2) SCOP, a subsidiary of COP, legally and beneficially interested in Guangzhou Lanwan as to 10% of its registered capital, as vendor;
(3) COG, an indirect wholly owned subsidiary of the Company, as purchaser; and
(4) COPM, an indirect subsidiary of the Company, as purchaser.

Asset Acquired by the Group from the COP Group

COG and COPM respectively agreed to acquire 90% and 10% interest in the registered capital in Guangzhou Lanwan, and all the related shareholder’s loan in relation to Guangzhou Lanwan in proportion to their shareholdings (such loan being non-interest bearing), from COP and SCOP. Upon completion, all the rights and liabilities arising on and after 1 November 2003 in respect of the registered capital in, and the shareholder’s loan in relation to, Guangzhou Lanwan, shall be deemed to belong to and be borne by COG and COPM.

Consideration

The initial aggregate consideration of approximately RMB96,421,000 (approximately HK$90,963,000) comprises the following (subject to adjustment as set out below):

(a) approximately RMB17,621,000 (approximately HK$16,624,000), the consideration in respect of the 100% interest in the registered capital in Guangzhou Lanwan, determined by reference to the unaudited net asset value of Guangzhou Lanwan as at 31 October 2003 of RMB11,531,000 (approximately HK$10,878,000), plus a premium taking into account the valuation of the underlying property interests as at 31 October 2003 by the Independent Valuer, the estimated initial development cost (being the cost of the site clearance work) and the actual cost paid by Guangzhou Lanwan in relation to such underlying property; and
(b) approximately RMB78,800,000 (approximately HK$74,340,000), the consideration in respect of the shareholders’ loans, being the face value of the loans as at 31 October 2003.

The consideration will be adjusted before completion in order to reflect the net asset value of Guangzhou Lanwan’s registered capital and the actual cost paid by Guangzhou Lanwan audited as of 31 October 2003 and the face value of the shareholder’s loan as of completion.

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LETTER FROM THE BOARD

The consideration (as adjusted) in respect of the 90% and 10% interest in the registered capital of Guangzhou Lanwan and the shareholders’ loans shall be paid by COG and COPM in proportion to their respective shareholdings in Guangzhou Lanwan, in cash on completion of the Lanwan Agreement.

The consideration was arrived at after arm’s length negotiations between the parties, and will be financed out of internal resources and existing banking facilities of the Group. The sale proceeds will be retained by the COP Group as general working capital.

Condition and Completion

Completion of the Lanwan Agreement is conditional upon the Independent Shareholders approving the Restructuring and such other matters as may be required by the Stock Exchange at an extraordinary general meeting of the Company, and will take place within 21 days after the condition has been fulfilled.

In the event that the above condition is not fulfilled on or before 31 March 2004 (or such other later date as the parties may agree), the Lanwan Agreement will lapse. Completion of the Lanwan Agreement is not conditional upon completion of the other Agreements.

Immediately after the completion of the Lanwan Agreement, Guangzhou Lanwan will become a wholly owned subsidiary of the Company.

Information on Guangzhou Lanwan

Guangzhou Lanwan was established in April 2001 with a total registered capital of RMB15,000,000 (approximately HK$14,151,000), all of which has been contributed in full.

The audited net asset value of Guangzhou Lanwan for the year ended 31 December 2002 was RMB11,367,000 (approximately HK$10,724,000). The audited profit/loss before and after tax of Guangzhou Lanwan for the two years ended 31 December 2002 is as follows:

	Year ended	Year ended
	31.12.2001	31.12.2002
	(Audited)	(Audited)
	RMB	RMB
Loss before/after tax	(1,674,000)	(1,959,000)

Other material information

The principal activity of Guangzhou Lanwan is property development in PRC. Its principal asset is a plot of land situated at Panyu District, Guangzhou, PRC with a total area of about 32,238 square metres. The site is expected to be developed into a residential compound. Construction for the project has not yet commenced pending the issue of the planning permit for construction works.

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LETTER FROM THE BOARD

The estimated initial development cost (being the cost of the site clearance work) for the project is expected to be approximately RMB70,000,000 (approximately HK$66,038,000). After the Restructuring, the Property Development Group will be responsible to arrange finance for Guangzhou Lanwan’s projects and business activities.

Relationship between the Connected Parties

COP is an indirect non-wholly owned subsidiary of the Company where SCO, an associate of CSCEC, is its substantial shareholder. The Lanwan Agreement therefore constitutes a connected transaction of the Company under the Listing Rules.

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LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE

Following completion of the Restructuring, the Group will consolidate its investments and interests in the property development and management operations in Changchun, Shenzhen, Nanjing and Beijing, PRC under its non-wholly owned COP Group, and the Group’s investments and interests in the property development and management operation in Guangzhou, PRC under its wholly owned subsidiary COG.

The shareholding structure of the Group in relation to these operations before and after the Restructuring are as follows:

Immediately prior to the Restructuring

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LETTER FROM THE BOARD

Immediately after the Restructuring

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LETTER FROM THE BOARD

BACKGROUND OF THE RESTRUCTURING

The Group is principally engaged in property development and investment, building and civil construction, foundation engineering and project management, infrastructure projects investments, and real estate agency in Hong Kong and in PRC. The Group’s operations and interests in property development and investment in PRC are held under various operational arms, comprising both wholly owned and nonwholly owned operation arms of the Group formed or acquired after taking into account the resources available in different entities of the Group at different stages. In coordinating its resources for more effective and focused development of the Group’s property development and investment operations in each different cities in PRC, difficulties arises, in particular, when third party interests are involved, such as the operations held under the non-wholly owned COP Group. Accordingly, the Board believes that a restructuring of the Group’s property development and investment interests and operations in PRC is required to streamline the structure by depicting two distinct groups of operating vehicles. This will also enable the Group to facilitate the proposed separate listing of the COP Group after a clear delineation of the Group’s interests and operations in property development and investment in PRC is established.

Completion of each of the Agreements under the Restructuring is subject to Independent Shareholders approving the Restructuring. Each of the Guo Run Agreement and the Seagarden Agreement has a further condition requiring third party minority shareholders’ consents. If Independent Shareholders approve the Restructuring but such third party minority shareholders’ consents cannot be obtained, the Restructuring will proceed on the basis that the Guo Run Agreement and/or the Seagarden Agreement (as the case may be) will not form part of the Restructuring and appropriate announcement will be made by the Company as and when required.

The transfers contemplated under the Restructuring require approvals from the relevant local PRC authorities. Given that these transfers are effected between companies within the same group or between connected persons, it is expected that such approvals would be obtained before completion of each of the Agreements.

IMPACT OF THE RESTRUCTURING

Impact on the operation of the Group

Following completion of the Restructuring, the Group will consolidate its interests and operations in property development and investment in Changchun, Shenzhen, Nanjing and Beijing, PRC under the COP Group and its interests and operations in property development and investment in all other existing cities in PRC (including Guangzhou) will be consolidated under the Property Development Group. The Board believes that the Restructuring will allow the Group to better manage its property development and investment operations in PRC and that the implementation of the various projects in all existing cities would not be affected in any material adverse manner.

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LETTER FROM THE BOARD

Financial impact on the Group

The aggregate initial consideration of the COP Group Restructuring and of the COG Restructuring represent about 7.34 per cent. and 1.67 per cent. of the Group’s NTA respectively.

The aggregate net asset value attributable to the interest in the registered capitals and the value of the shareholders’ loans to be transferred under the COP Group Restructuring as at 31 December 2002 is about HK$223,360,000, representing about 2.94 per cent. of the Group’s audited net tangible assets as at 31 December 2002. Profits attributable to such interests to be transferred for the financial year ended 31 December 2001 is about HK$169,000. Losses attributable to such interests to be transferred for the financial year ended 31 December 2002 is about HK$22,000.

The aggregate net asset value attributable to the interest in the registered capitals and the value of the shareholders’ loans to be transferred under the COG Restructuring as at 31 December 2002 amounts to about HK$1,901,000, representing about 0.03 per cent., of the Group’s audited net tangible assets as at 31 December 2002. Profit attributable to such interests to be transferred for the financial year ended 31 December 2002 is about HK$1,000 and nil for the financial year ended 31 December 2001.

The Restructuring will result in very slight changes in the Group’s overall attributable interest in the assets subject to the Restructuring, with reference to the net asset value and net profit of the Group attributable to these assets for the financial year ended 31 December 2002. Based on the net asset value of the Group attributable to these assets for the financial year ended 31 December 2002, the net asset value of the Group for the year ended 31 December 2002 will be reduced by HK$3,233,000 as a result, representing a reduction of 0.04% of the Group’s audited net tangible assets as at 31 December 2002. Based on the net profit of the Group attributable to these assets for the financial year ended 31 December 2002, the net profit of the Group for the year ended 31 December 2002 will be increased by HK$21,000 as a result, representing an increase of 0.06% of the Group’s net profit for the year ended 31 December 2002.

BENEFIT AND REASON FOR THE RESTRUCTURING

Following completion of the Restructuring, the Group can better streamline its interests and operations in property development and investment in PRC for more efficient and effective management and control. By consolidating the operations in Changchun, Shenzhen, Nanjing and Beijing under the COP Group, which is headquartered in Shenzhen and has significant management presence in Beijing, the COP Group can utilise its resources more effectively to better manage the operations in these four cities, with the view that the COP Group will develop into the Group’s flagship in these four cities. Whereas, by consolidating operations in Guangzhou and all other existing cities (including Shanghai, Chengdu, Zhongshan, Xian etc.) under the Property Development Group, the Property Development Group will be well positioned to focus its management strength and expertise in property development and investment in these other cities. The Board believes that the operations of the COP Group and the Property Development Group would complement each other and the Group’s business in property development and investment in PRC can be enhanced. As such, each of the COP Group and the Property Development Group will be able to strive to maximise the market shares in their respective territories of operations, and the Restructuring is therefore beneficial to the Shareholders.

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LETTER FROM THE BOARD

As disclosed in the Company’s latest interim report, the pre-listing nurture period for COP to make an application of the listing of its shares on the Shanghai Stock Exchange A share market in PRC (“ Spin Off Plan ”) has already expired on 28 August 2003 and the Group is now undergoing the guidance inspection work on the nurture. The Restructuring is an important step to provide COP with a clear line and area of business operations that can be clearly distinguished from the rest of the Group. It also serves to prepare for the Spin Off Plan. The Board considers that the success of the Spin Off Plan is important for the future development of the COP Group and also for establishing the leading position of the Group (through the COP Group as well as the Property Development Group) in the property development and investment business in PRC.

The timetable and other details relating to the Spin Off Plan are yet to be determined and the Spin Off Plan may or may not materialise. In the event that an application for the Spin Off Plan is made, the Company will comply with the Listing Rules and further announcement will be made to advise the shareholders relating to the Spin Off Plan and if required, shareholders’ approval will also be obtained.

With the resources available to the Group and its relationship, expertise and knowledge in both PRC and overseas, the Board expects that the Group’s property development and investment business in PRC will continue to grow after the Restructuring, leading to better development and commercial benefit.

The Directors (other than members of the Independent Board Committee whose opinion is set out in the section headed “Letter from the Independent Board Committee” below) are of the opinion that the Restructuring, the Agreements and the transactions contemplated thereunder are on normal commercial terms that are fair and reasonable so far as the Company and the shareholders are concerned and the Restructuring is in the interest of the Company and its shareholders as a whole.

EXTRAORDINARY GENERAL MEETING

Set out at the end of this circular is a notice convening the EGM to be held at 30th Floor, China Overseas Building, 139 Hennessy Road, Wanchai, Hong Kong at 10:00 a.m. on Friday, 30 January 2004 for the purpose of considering and, if thought fit, passing the resolution set out therein.

A form of proxy for use at the EGM is enclosed. Whether or not you are able to attend the meeting, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company’s registrars, Standard Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible but in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish. CSCEC and its associates will abstain from voting at the EGM in respect of the Restructuring, the Agreements and the transactions contemplated thereunder.

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LETTER FROM THE BOARD

RECOMMENDATION

The Independent Board Committee has been formed to advise the Independent Shareholders in relation to the Restructuring, the Agreements and the transactions contemplated thereunder. Yu Ming Investment Management Limited has been appointed as the independent financial adviser to advise the Independent Board Committee in this respect.

The Independent Board Committee, having taken into account the advice of the IFA, is of the opinion that the terms of the Restructuring, the Agreements and the transactions contemplated thereunder are fair and reasonable so far as the Independent Shareholders are concerned and accordingly, recommends that the Independent Shareholders vote in favour of the ordinary resolution regarding the Restructuring, the Agreements and the transactions contemplated thereunder set out in the notice of EGM at the end of this circular.

The letter from the IFA containing its advice and recommendation to the Independent Board Committee is set out on pages 39 to 58 of this circular. The letter from the Independent Board Committee to the Independent Shareholders containing its recommendation is set out on page 38 of this circular.

ADDITIONAL INFORMATION

Your attention is also drawn to the valuation report by the Independent Valuer in respect of the properties subject to the Restructuring and the general information set out in the Appendices to this circular.

Yours faithfully, By order of the Board China Overseas Land & Investment Limited Kong Qingping

Vice Chairman & Chief Executive

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(incorporated in Hong Kong with limited liability)

Registered Office:

29th Floor, China Overseas Building 139 Hennessy Road Wanchai Hong Kong

14 January 2004

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTIONS

RESTRUCTURING OF THE GROUP’S PROPERTY DEVELOPMENT AND INVESTMENT OPERATIONS IN PRC

We have been appointed as the Independent Board Committee to advise you in connection with the Restructuring, the Agreements and the transactions contemplated thereunder, details of which are set out in the letter from the Board contained in the circular to the shareholders of the Company dated 14 January 2004 (the “ Circular ”), of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

Yu Ming Investment Management Limited has been appointed as the independent financial adviser to consider and advise the Independent Board Committee on the Restructuring, the Agreements and the transactions contemplated thereunder.

Having considered the terms of the Restructuring, the Agreements and the transactions contemplated thereunder and the principal factors, reasons and opinion of the IFA in relation thereto as set out on pages 39 to 58 of the Circular, we are of the opinion that the terms of the Restructuring, the Agreements and the transactions contemplated thereunder are fair and reasonable so far as the Independent Shareholders are concerned and are in interests of the Independent Shareholders. We therefore recommend that you vote in favour of the ordinary resolution to be proposed at the EGM to approve the Restructuring, the Agreements and the transactions contemplated thereunder. Your attention is drawn to the letter from the Board and the letter from the IFA set out in the Circular.

Yours faithfully, For and on behalf of the Independent Board Committee

Dr. Li Kwok Po, David O.B.E., J.P.

Independent Non-Executive Director

Mr. Lam Kwong Siu

Independent Non-Executive Director

Mr. Wong Ying Ho, Kennedy

Independent Non-Executive Director

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter prepared by the IFA for the purposes of inclusion of this circular:

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

14th January, 2004

To the Independent Board Committee

Dear Sir or Madam,

CONNECTED TRANSACTIONS

INVOLVING RESTRUCTURING OF THE GROUP’S PROPERTY DEVELOPMENT AND INVESTMENT OPERATIONS IN THE PRC

INTRODUCTION

We have been appointed to advise the Independent Board Committee in respect of the Restructuring, details of which are set out in the Letter from the Board in the circular to the shareholders of the Company dated 14th January, 2004 (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, opinions and representations provided to us by the Directors. We have assumed that all statements, information, opinions and representations contained or referred to in the Circular and all information, opinions and representations 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 opinions and representations 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.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. The Restructuring

On 23rd December, 2003, the Group entered into various agreements to carry out the Restructuring which comprises the COP Group Restructuring and the COG Restructuring.

The COP Group Restructuring involves the disposal of certain property development and investment operations in Changchun, Shenzhen, Nanjing and Beijing by wholly-owned subsidiaries of the Company and a subsidiary of CSCEC to the COP Group.

The COG Restructuring involves the acquisition of certain property development and investment operations in Guangzhou by the Group (other than the COP Group) from the COP Group.

2. Reasons for the Restructuring

The Board believes that the Restructuring would streamline the structure of the Group by depicting two distinct groups of operating vehicles, and with a clear delineation of the Group’s interests and operations in property development and investment in the PRC, would facilitate the proposed separate listing of the COP Group.

Since the timetable and other details relating to the Spin Off Plan have not been determined yet and the Spin Off Plan may or may not proceed, we are not in a position to opine the effects of the Spin Off Plan on the Group.

As the shares of the Company are listed on the Stock Exchange, the separate listing of the COP Group is subject to Practice Note 15 of the Listing Rules, whether the shares of COP would be listed on the Shanghai Stock Exchange A share market in the PRC or any other stock exchange elsewhere. Pursuant to Practice Note 15 of the Listing Rules, one of the principles the Listing Committee of the Stock Exchange would apply is a clear delineation between the business(es) retained by Parent (in our case the Group but excluding the COP Group) and the business(es) of Newco (in our case the COP Group). Since both the Group (excluding the COP Group) and the COP Group are engaged in property development and investment in the PRC, they are competing with each other and the requirement could not be met unless with the completion of the Restructuring, which delineates their businesses geographically. We therefore concur with the view of the Board and are of the view that the Restructuring is an important step in preparation for a separate listing of the COP Group.

Pursuant to Practice Note 15 of the Listing Rules, another principle the Listing Committee of the Stock Exchange would apply is that there should be clear commercial benefits, both to the Parent (in our case the Group but excluding the COP Group) and to Newco (in our case the COP Group), in the spinoff. Although the commercial benefits cannot be defined today as the timetable and other details relating to the Spin Off Plan have not been determined yet, completion of the Restructuring gives the Company an opportunity to proceed with the Spin-Off Plan, which would otherwise not be available to the Company for consideration. Therefore, we are of the view that the Restructuring is in the interest of the Company and the Independent Shareholders.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3. The Agreements

A. The COP Group Restructuring
a. The CCOP Agreement
- i. The transaction

The Company agreed to dispose of its 25% interest in the registered capital in CCOP to CCHK, a direct wholly-owned subsidiary of COP.

ii. Information on CCOP

The principal asset of CCOP is the holding of the first phase of a commercial and residential development project currently known as 水岸春城 (Zhong Hai Shui An Chun Cheng) situating in Changchun, the PRC. Further details of the CCOP Project are set out in the Letter from the Board and the valuation report prepared by the Independent Valuer set out in Appendix I to the Circular.

The unaudited net asset value of CCOP as at 31st October, 2003 was RMB4,372,000 (approximately HK$4,125,000). The CCOP Project is currently under construction and was valued by the Independent Valuer at RMB145,000,000 (approximately HK$136,792,000) as at 31st October, 2003 on the assumption that the project is developed and completed in accordance with the Group’s development proposal, taking into account the construction costs that have already been expended and will be expended to complete the project.

iii. Consideration

The consideration will be based on the audited net asset value of CCOP after adjustment for the valuation of the CCOP Project as at 31st October, 2003 prepared by the Independent Valuer which is attributable to the Company’s 25% interest in the registered capital in CCOP. We consider that the consideration calculated on this basis is fair and reasonable.

We have discussed with the Independent Valuer about the basis and assumptions of the valuation and consider them to be reasonable.

Based on the unaudited net asset value of CCOP and the unaudited book value of the CCOP Project as at 31st October, 2003 and the valuation prepared by the Independent Valuer, the initial consideration shall be approximately RMB1,770,000 (approximately HK$1,670,000), which will be adjusted on the basis set out above.

The consideration shall be payable by CCHK in cash which will be retained by the Company as general working capital.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

iv. Financial impact

Since the consideration will be calculated based on the audited net asset value of CCOP after adjustment for the valuation prepared by the Independent Valuer, the impact of the CCOP Agreement will depend on the difference of the audited book value and the valuation of the CCOP Project.

Based on the unaudited book value of the CCOP Project as at 31st October, 2003 of RMB142,290,000 (approximately HK$134,236,000) and the valuation of the CCOP Project at RMB145,000,000 (approximately HK$136,792,000) as at 31st October, 2003, the Company should report an increase in net assets and a profit of approximately RMB677,500 (approximately HK$639,151) as a result of completion of the CCOP Agreement.

Based on the initial consideration, the Company should realize about RMB1,770,000 (approximately HK$1,670,000) cash, which however, is insignificant as compared to the cash position of the Group of approximately HK$2.5 billion as at 30th June, 2003.

However, since CCHK, the purchaser, is a direct wholly-owned subsidiary of COP which in turn is a subsidiary owned as to 79% by the Company, the Company disposes of an effective interest of only about 5.25% in the registered capital in CCOP under the CCOP Agreement. The Company would therefore only report an increase of net assets and a profit of approximately RMB142,275 (approximately HK$134,222) and realized cash of approximately RMB371,700 (approximately HK$350,660) on a consolidated basis as a result of completion of the CCOP Agreement.

v. Recommendation

The CCOP Agreement is part of the Restructuring. Since the Restructuring is an important step in preparation for a separate listing of the COP Group and would give the Company an opportunity to proceed with the Spin-Off Plan which would otherwise not be available to the Company for consideration, we are of the view that the CCOP Agreement is in the interest of the Independent Shareholders.

Since the consideration is determined on a fair and reasonable basis, we are of the view that the terms of the CCOP Agreement are fair and reasonable so far as the interest of the Company and the Independent Shareholders are concerned.

b. The SCOP Agreement

i. The transaction

COZG, an indirect wholly-owned subsidiary of the Company, agreed to dispose of its 25% interest in the registered capital in SCOP and all shareholders’ loan in relation to SCOP to CCHK, a direct wholly-owned subsidiary of COP.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

ii. Information on SCOP

The principal assets of SCOP are:

(a) 20% equity interest in NJCOP which is engaged in property development and management in Nanjing, the PRC and has not yet commenced any active business and has no property interest;
(b) property holdings in Shenzhen, the PRC comprising carparks at Dynasty Court, retail and office spaces at Shenzhen China Overseas Building and a residential unit at Vista Height which are currently either leased, licensed, owner-occupied or vacant and were valued by the Independent Valuer at RMB120,460,000 (approximately HK$113,641,509) as at 31st October, 2003;
(c) a residential and commercial development project currently identified as 橫崗項目 (Henggang Project) situating in Shenzhen, the PRC which is currently a vacant site and was valued by the Independent Valuer at RMB118,950,000 (approximately HK$112,216,981) as at 31st October, 2003; and
(d) 20% equity interest in BCOP whose principal assets comprise 70% equity interest in BCOHT and a residential and commercial development project currently known as 中海馥園 (Zhong Hai Fu Yuan) situating in Beijing, the PRC. Zhong Hai Kai Xuan Yuan owned by BCOHT is currently under construction and was valued by the Independent Valuer at RMB630,000,000 (approximately HK$594,339,623) as at 31st October, 2003 on the assumption that the project is developed and completed in accordance with the Group’s development proposal, taking into account the construction costs that have already been expended and will be expended to complete the project. Zhong Hai Fu Yuan has been completed and was valued by the Independent Valuer at RMB273,033,000 (approximately HK$257,578,302) as at 31st October, 2003.

Further details of the property interests of SCOP are set out in the Letter from the Board and the valuation report prepared by the Independent Valuer set out in Appendix I to the Circular.

The audited net asset value of SCOP as at 31st December, 2002 was RMB57,150,000 (approximately HK$53,915,000).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

iii. Consideration

The consideration for the 25% interest in the registered capital in SCOP will be based on the audited net asset value of SCOP after adjustment for the valuation of the property interests of SCOP as at 31st October, 2003 prepared by the Independent Valuer, which is attributable to COZG’s 25% interest in the registered capital in SCOP. In relation to the Henggang Project, its book value will be adjusted for the premium of the valuation over the estimated initial development cost based on the proportion of the book value and/or the actual cost paid by SCOP to the total estimated initial development cost.

The consideration for the shareholders’ loan in relation to SCOP will be based on face value.

We consider that the consideration calculated on the above basis is fair and reasonable.

We have discussed with the Independent Valuer about the basis and assumptions of the valuation and consider them to be reasonable.

We have discussed with the Company about the basis and assumptions of the estimated initial development cost for the Henggang Project and consider them to be reasonable.

Based on (a) the unaudited net asset value of SCOP and the unaudited book value of the property interests of SCOP as at 31st October, 2003, (b) the valuation prepared by the Independent Valuer, (c) the estimated initial development cost for the Henggang Project and (d) the book value and/or actual cost paid by SCOP in relation to the Henggang Project, the initial consideration for the 25% interest in the registered capital in SCOP and the shareholders’ loan in relation to SCOP shall be approximately RMB31,732,000 (approximately HK$29,936,000) and RMB26,750,000 (approximately HK$25,236,000) respectively, which will be adjusted on the basis set out above.

The consideration shall be payable by CCHK in cash which will be retained by COZG as general working capital.

iv. Financial impact

Since the consideration for the 25% interest in the registered capital in SCOP will be calculated based on the audited net asset value of SCOP after adjustment for the valuation prepared by the Independent Valuer, the impact of the SCOP Agreement will depend on the difference of the audited book value and the valuation of the property interests of SCOP.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the unaudited book value and the valuation of the property interests of SCOP as at 31st October, 2003, COZG should report an increase in net assets and a profit of approximately RMB16,416,016 (approximately HK$15,486,808) as a result of completion of the SCOP Agreement.

Based on the initial consideration, COZG should realize about RMB58,482,000 (approximately HK$55,172,000) cash, which would moderately improve the cash position of the Group.

However, since CCHK, the purchaser, is a direct wholly-owned subsidiary of COP which in turn is a subsidiary owned as to 79% by the Company, the Company disposes of an effective interest of only about 5.25% in the registered capital in SCOP under the SCOP Agreement. The Company would therefore only report an increase of net assets and a profit of approximately RMB3,447,363 (approximately HK$3,252,230) and realized cash of approximately RMB12,281,220 (approximately HK$11,586,057) on a consolidated basis as a result of completion of the SCOP Agreement.

v. Recommendation

The SCOP Agreement is part of the Restructuring. Since the Restructuring is an important step in preparation for a separate listing of the COP Group and would give the Company an opportunity to proceed with the Spin-Off Plan which would otherwise not be available to the Company for consideration, we are of the view that the SCOP Agreement is in the interest of the Independent Shareholders.

Since the consideration is determined on a fair and reasonable basis, we are of the view that the terms of the SCOP Agreement are fair and reasonable so far as the interest of the Company and the Independent Shareholders are concerned.

c. The Guo Run Agreement

i. The transaction

Beijing Xingye, an indirect wholly-owned subsidiary of the Company, agreed to dispose of its 75% interest in the registered capital in Beijing Guo Run and all shareholders’ loan in relation to Beijing Guo Run to COP.

ii. Information on Beijing Guo Run

The principal asset of Beijing Guo Run is a plot of land situated in Chaoyang District, Beijing, the PRC. Further details of such property interest are set out in the Letter from the Board and the valuation report prepared by the Independent Valuer set out in Appendix I to the Circular.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The audited net asset value of Beijing Guo Run as at 31st December, 2002 was RMB29,931,000 (approximately HK$28,237,000). The property interest of Beijing Guo Run is currently occupied by various blocks of residential and commercial buildings pending for site clearance and was valued by the Independent Valuer at RMB700,000,000 (approximately HK$660,377,358) as at 31st October, 2003.

iii. Consideration

The consideration for the 75% interest in the registered capital in Beijing Guo Run will be based on the audited net asset value of Beijing Guo Run after adjustment for the premium of the valuation of the property interest of Beijing Guo Run as at 31st October, 2003 prepared by the Independent Valuer over the estimated initial development cost, which is attributable to Beijing Xingye’s 75% interest in the registered capital in Beijing Guo Run. The adjustment for the premium will be based on the proportion of the actual cost paid by Beijing Guo Run to the total estimated initial development cost.

The consideration for the shareholders’ loan in relation to Beijing Guo Run will be based on face value.

We consider that the consideration calculated on the above basis is fair and reasonable.

We have discussed with the Independent Valuer about the basis and assumptions of the valuation and consider them to be reasonable.

We have discussed with the Company about the basis and assumptions of the estimated initial development cost and consider them to be reasonable.

Based on (a) the unaudited net asset value of Beijing Guo Run as at 31st October, 2003, (b) the valuation prepared by the Independent Valuer, (c) the estimated initial development cost and (d) the actual cost paid by Beijing Guo Run, the initial consideration for the 75% interest in the registered capital in Beijing Guo Run and the shareholders’ loan in relation to Beijing Guo Run shall be approximately RMB27,980,000 (approximately HK$26,396,000) and RMB200,000,000 (approximately HK$188,679,000) respectively, which will be adjusted on the basis set out above.

The consideration shall be payable by COP in cash which will be retained by Beijing Xingye as general working capital.

iv. Financial impact

Since the consideration will be calculated based on the audited net asset value of Beijing Guo Run after adjustment for the valuation prepared by the Independent Valuer, the impact of the Guo Run Agreement will depend on the difference of the audited book value and the valuation of the property interest of Beijing Guo Run.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the unaudited book value of Beijing Guo Run attributable to Beijing Xingye’s 75% interest in the registered capital in Beijing Guo Run of RMB22,280,000 (approximately HK$21,019,000) as at 31st October, 2003 and the initial consideration of RMB27,980,000 (approximately HK$26,396,000) for the 75% interest in the registered capital in Beijing Guo Run, Beijing Xingye should report an increase in net assets and a profit of approximately RMB5,700,000 (approximately HK$5,377,358) as a result of completion of the Guo Run Agreement.

Based on the initial consideration, Beijing Xingye should realize about RMB227,980,000 (approximately HK$215,075,000) cash, which would improve the cash position of the Group.

However, COP, the purchaser, is a subsidiary owned as to 79% by the Company, the Company disposes of an effective interest of only about 15.75% in the registered capital in Beijing Guo Run under the Guo Run Agreement. The Company would therefore only report an increase of net assets and a profit of approximately RMB1,197,000 (approximately HK$1,129,245) and realized cash of approximately RMB47,875,800 (approximately HK$45,165,849) on a consolidated basis as a result of completion of the Guo Run Agreement.

v. Recommendation

The Guo Run Agreement is part of the Restructuring. Since the Restructuring is an important step in preparation for a separate listing of the COP Group and would give the Company an opportunity to proceed with the Spin-Off Plan which would otherwise not be available to the Company for consideration, we are of the view that the Guo Run Agreement is in the interest of the Independent Shareholders.

Since the consideration is determined on a fair and reasonable basis, we are of the view that the terms of the Guo Run Agreement are fair and reasonable so far as the interest of the Company and the Independent Shareholders are concerned.

d. The Seagarden Agreement

i. The transaction

COB and Beijing Xingye, indirect wholly-owned subsidiaries of the Company, agreed to dispose of their aggregate 72% interest in the registered capital in Beijing Seagarden and all shareholders’ loan in relation to Beijing Seagarden to COP.

ii. Information on Beijing Seagarden

The principal asset of Beijing Seagarden is a plot of land situated in Changping District, Beijing, the PRC. Further details of such property interest are set out in the Letter from the Board and the valuation report prepared by the Independent Valuer set out in Appendix I to the Circular.

47 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The unaudited net asset value of Beijing Seagarden as at 31st October, 2003 was RMB19,396,304 (approximately HK$18,298,400). The property interest of Beijing Seagarden is currently a vacant grass land and was valued by the Independent Valuer at RMB341,000,000 (approximately HK$321,698,113) as at 31st October, 2003.

iii. Consideration

The consideration for the aggregate 72% interest in the registered capital in Beijing Seagarden will be based on the audited net asset value of Beijing Seagarden after adjustment for the premium of the valuation of the property interest of Beijing Seagarden as at 31st October, 2003 prepared by the Independent Valuer over the estimated initial development cost, which is attributable to COB and Beijing Xingye’s aggregate 72% interest in the registered capital in Beijing Seagarden. The adjustment for the premium will be based on the proportion of the actual cost paid by Beijing Seagarden to the total estimated initial development cost.

The consideration for the shareholders’ loan in relation to Beijing Seagarden will be based on face value.

We consider that the consideration calculated on the above basis is fair and reasonable.

We have discussed with the Independent Valuer about the basis and assumptions of the valuation and consider them to be reasonable.

We have discussed with the Company about the basis and assumptions of the estimated initial development cost and consider them to be reasonable.

Based on (a) the unaudited net asset value of Beijing Seagarden as at 31st October, 2003, (b) the valuation prepared by the Independent Valuer, (c) the estimated initial development cost and (d) the actual cost paid by Beijing Seagarden, the initial consideration for the aggregate 72% interest in the registered capital in Beijing Seagarden and the shareholders’ loan in relation to Beijing Seagarden shall be approximately RMB14,185,000 (approximately HK$13,382,000) and RMB43,400,000 (approximately HK$40,943,000) respectively, which will be adjusted on the basis set out above.

The consideration shall be payable by COP in cash which will be retained by COB and Beijing Xingye as general working capital.

iv. Financial impact

Since the consideration will be calculated based on the audited net asset value of Beijing Seagarden after adjustment for the valuation prepared by the Independent Valuer, the impact of the Seagarden Agreement will depend on the difference of the audited book value and the valuation of the property interest of Beijing Seagarden.

48 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the unaudited book value of Beijing Seagarden attributable to COB and Beijing Xingye’s aggregate 72% interest in the registered capital in Beijing Seagarden of RMB13,965,000 (approximately HK$13,175,000) as at 31st October, 2003 and the initial consideration of RMB14,185,000 (approximately HK$13,382,000) for the aggregate 72% interest in the registered capital in Beijing Seagarden, COB and Beijing Xingye should report an aggregate increase in net assets and a profit of approximately RMB220,000 (approximately HK$207,547) as a result of completion of the Seagarden Agreement.

Based on the initial consideration, COB and Beijing Xingye should realize about RMB57,585,000 (approximately HK$54,325,000) cash in aggregate, which would improve the cash position of the Group.

However, COP, the purchaser, is a subsidiary owned as to 79% by the Company, the Company disposes of an effective interest of only about 15.12% in the registered capital in Beijing Seagarden under the Seagarden Agreement. The Company would therefore only report an increase of net assets and a profit of approximately RMB46,086 (approximately HK$43,477) and realized cash of approximately RMB12,092,850 (approximately HK$11,408,349) on a consolidated basis as a result of completion of the Seagarden Agreement.

v. Recommendation

The Seagarden Agreement is part of the Restructuring. Since the Restructuring is an important step in preparation for a separate listing of the COP Group and would give the Company an opportunity to proceed with the Spin-Off Plan which would otherwise not be available to the Company for consideration, we are of the view that the Seagarden Agreement is in the interest of the Independent Shareholders.

Since the consideration is determined on a fair and reasonable basis, we are of the view that the terms of the Seagarden Agreement are fair and reasonable so far as the interest of the Company and the Independent Shareholders are concerned.

e. The Tiancheng Agreement

i. The transaction

COB and Bejing Xingye, indirect wholly-owned subsidiaries of the Company, agreed to dispose of their aggregate 100% interest in the registered capital in Beijing Tiancheng and all shareholders’ loan in relation to Beijing Tiancheng to COP and its direct wholly-owned subsidiary, CCHK.

ii. Information on Beijing Tiancheng

The principal asset of Beijing Tiancheng is a plot of land situated in Haidian District, Beijing, the PRC. Further details of such property interest are set out in the Letter from the Board and the valuation report prepared by the Independent Valuer set out in Appendix I to the Circular.

49 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The unaudited net asset value of Beijing Tiancheng as at 31st October, 2003 was RMB14,555,954 (approximately HK$13,732,032). The property interest of Beijing Tiancheng was valued by the Independent Valuer at RMB301,000,000 (approximately HK$283,962,264) as at 31st October, 2003.

iii. Consideration

The consideration for the aggregate 100% interest in the registered capital in Beijing Tiancheng will be based on the audited net asset value of Beijing Tiancheng after adjustment for the premium of the valuation of the property interest of Beijing Tiancheng as at 31st October, 2003 prepared by the Independent Valuer over the estimated initial development cost, which is attributable to COB and Beijing Xingye’s aggregate 100% interest in the registered capital in Beijing Tiancheng. The adjustment for the premium will be based on the proportion of the actual cost paid by Beijing Tiancheng to the total estimated initial development cost.

The consideration for the shareholders’ loan in relation to Beijing Tiancheng will be based on face value.

We consider that the consideration calculated on the above basis is fair and reasonable.

We have discussed with the Independent Valuer about the basis and assumptions of the valuation and consider them to be reasonable.

We have discussed with the Company about the basis and assumptions of the estimated initial development cost and consider them to be reasonable.

Based on (a) the unaudited net asset value of Beijing Tiancheng as at 31st October, 2003, (b) the valuation prepared by the Independent Valuer, (c) the estimated initial development cost and (d) the actual cost paid by Beijing Tiancheng, the initial consideration for the aggregate 100% interest in the registered capital in Beijing Tiancheng and the shareholders’ loan in relation to Beijing Tiancheng shall be approximately RMB15,568,000 (approximately HK$14,687,000) and RMB150,000,000 (approximately HK$141,509,000) respectively, which will be adjusted on the basis set out above.

The consideration shall be payable by COP and CCHK in cash which will be retained by COB and Beijing Xingye as general working capital.

iv. Financial impact

Since the consideration will be calculated based on the audited net asset value of Beijing Tiancheng after adjustment for the valuation prepared by the Independent Valuer, the impact of the Tiancheng Agreement will depend on the difference of the audited book value and the valuation of the property interest of Beijing Tiancheng.

50 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the unaudited book value of Beijing Tiancheng of RMB14,556,000 (approximately HK$13,732,000) as at 31st October, 2003 and the initial consideration of RMB15,568,000 (approximately HK$14,687,000) for the aggregate 100% interest in the registered capital in Beijing Tiancheng, COB and Beijing Xingye should report an aggregate increase in net assets and a profit of approximately RMB1,012,000 (approximately HK$954,717) as a result of completion of the Tiancheng Agreement.

Based on the initial consideration, COB and Beijing Xingye should realize about RMB165,568,000 (approximately HK$156,196,000) cash in aggregate, which would improve the cash position of the Group.

However, CCHK is a direct wholly-owned subsidiary of COP and COP is a subsidiary owned as to 79% by the Company (both being the purchasers), the Company disposes of an effective interest of only 21% in the registered capital in Beijing Tiancheng under the Tiancheng Agreement. The Company would therefore only report an increase of net assets and a profit of approximately RMB212,520 (approximately HK$200,491) and realized cash of approximately RMB34,769,280 (approximately HK$32,801,208) on a consolidated basis as a result of completion of the Tiancheng Agreement.

v. Recommendation

The Tiancheng Agreement is part of the Restructuring. Since the Restructuring is an important step in preparation for a separate listing of the COP Group and would give the Company an opportunity to proceed with the Spin-Off Plan which would otherwise not be available to the Company for consideration, we are of the view that the Tiancheng Agreement is in the interest of the Independent Shareholders.

Since the consideration is determined on a fair and reasonable basis, we are of the view that the terms of the Tiancheng Agreement are fair and reasonable so far as the interest of the Company and the Independent Shareholders are concerned.

f. The Yorkley Agreement

i. The transaction

COZG, an indirect wholly-owned subsidiary of the Company, agreed to dispose of the entire issued share capital in Gain Direct and all shareholders’ loan in relation to Gain Direct to CCHK, a direct wholly-owned subsidiary of COP.

ii. Information on Gain Direct

The principal asset of Gain Direct is the holding of 95% equity interest in Beijing Yorkley whose major asset is a plot of land situated in Chaoyang District, Beijing, the PRC. Further details of such property interest are set out in the Letter from the Board and the valuation report prepared by the Independent Valuer set out in Appendix I to the Circular.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The unaudited consolidated net deficit of Gain Direct as at 31st October, 2003 was RMB16,893,000 (approximately HK$15,937,000). The property interest of Gain Direct is currently a vacant grass land and was valued by the Independent Valuer at RMB380,500,000 (approximately HK$358,962,264) as at 31st October, 2003.

iii. Consideration

The consideration for the entire issued share capital in Gain Direct will be based on the audited net asset value of Gain Direct after adjustment for the premium of the valuation of the property interest of Gain Direct as at 31st October, 2003 prepared by the Independent Valuer over the estimated initial development cost. The adjustment for the premium will be based on the proportion of the actual cost paid by Gain Direct to the total estimated initial development cost. If the consideration so calculated shall be HK$0 or less than HK$0, the consideration shall be HK$1.

The consideration for the shareholders’ loan in relation to Gain Direct will be based on face value.

We consider that the consideration calculated on the above basis is fair and reasonable.

We have discussed with the Independent Valuer about the basis and assumptions of the valuation and consider them to be reasonable.

We have discussed with the Company about the basis and assumptions of the estimated initial development cost and consider them to be reasonable.

Based on (a) the unaudited consolidated net deficit of Gain Direct as at 31st October, 2003, (b) the valuation prepared by the Independent Valuer, (c) the estimated initial development cost and (d) the actual cost paid by Gain Direct, the initial consideration for the entire issued share capital in Gain Direct and the shareholders’ loan in relation to Gain Direct shall be approximately HK$1 and RMB85,581,000 (approximately HK$80,736,792) respectively, which will be adjusted on the basis set out above.

The consideration shall be payable by CCHK in cash which will be retained by COZG as general working capital.

iv. Financial impact

Since the consideration will be calculated based on the audited net asset value of Gain Direct after adjustment for the valuation prepared by the Independent Valuer, the impact of the Yorkley Agreement will depend on the difference of the audited book value and the valuation of the property interest of Gain Direct.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the unaudited consolidated net deficit of Gain Direct of RMB16,893,000 (approximately HK$15,937,000) as at 31st October, 2003 and the initial consideration of HK$1 for the entire issued share capital in Gain Direct, COZG should report an increase in net assets and a profit of approximately RMB16,893,000 (approximately HK$15,937,000) as a result of completion of the Yorkley Agreement.

Based on the initial consideration, COZG should realize about RMB85,581,000 (approximately HK$80,736,792) cash, which would improve the cash position of the Group.

However, CCHK, the purchaser, is a direct wholly-owned subsidiary of COP which in turn is a subsidiary owned as to 79% by the Company, the Company disposes of an effective interest of only 21% in the issued share capital in Gain Direct under the Yorkley Agreement. The Company would therefore only report an increase of net assets and a profit of approximately RMB3,547,530 (approximately HK$3,346,726) and realized cash of approximately RMB17,972,010 (approximately HK$16,954,726) on a consolidated basis as a result of completion of the Yorkley Agreement.

v. Recommendation

The Yorkley Agreement is part of the Restructuring. Since the Restructuring is an important step in preparation for a separate listing of the COP Group and would give the Company an opportunity to proceed with the Spin-Off Plan which would otherwise not be available to the Company for consideration, we are of the view that the Yorkley Agreement is in the interest of the Independent Shareholders.

Since the consideration is determined on a fair and reasonable basis, we are of the view that the terms of the Yorkley Agreement are fair and reasonable so far as the interest of the Company and the Independent Shareholders are concerned.

g. The BCOHT Agreement

i. The transaction

COP, an indirect non-wholly-owned subsidiary of the Company, agreed to acquire 30% interest in the registered capital in BCOHT from SCO, a direct nonwholly-owned subsidiary of CSCEC.

ii. Information on BCOHT

The principal asset of BCOHT is the holding of a residential development project currently known as 中海凱旋 (Zhong Hai Kai Xuan) situating in Xicheng District, Beijing, the PRC. Further details of such property interest are set out in the Letter from the Board and the valuation report prepared by the Independent Valuer set out in Appendix I to the Circular.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The unaudited net asset value of BCOHT as at 31st October, 2003 was RMB3,361,892 (approximately HK$3,171,596). The property interest of BCOHT is currently under construction and was valued by the Independent Valuer at RMB630,000,000 (approximately HK$594,339,623) as at 31st October, 2003 on the assumption that the project is developed and completed in accordance with the Group’s development proposal, taking into account the construction costs that have already been expended and will be expended to complete the project.

iii. Consideration

The consideration for the 30% interest in the registered capital in BCOHT will be based on the audited net asset value of BCOHT after adjustment for the valuation of the property interest of BCOHT as at 31st October, 2003 prepared by the Independent Valuer, which is attributable to the SCO’s 30% interest in the registered capital in BCOHT. We consider that the consideration calculated on this basis is fair and reasonable.

We have discussed with the Independent Valuer about the basis and assumptions of the valuation and consider them to be reasonable.

Based on (a) the unaudited net asset value of BCOHT as at 31st October, 2003, (b) the book value of the property interest of BCOHT and (c) the valuation prepared by the Independent Valuer, the initial consideration for the 30% interest in the registered capital in BCOHT shall be approximately RMB4,908,000 (approximately HK$4,631,000), which will be adjusted on the basis set out above.

The consideration shall be payable by COP in cash.

iv. Financial impact

The initial consideration of approximately RMB4,908,000 (approximately HK$4,631,000) will be financed by the internal resources and existing banking facilities of the COP Group. Given the cash position of the Group of approximately HK$2.5 billion and a current ratio of approximately 1.78 times as at 30th June, 2003, the impact on the working capital of the Group is insignificant.

v. Recommendation

The BCOHT Agreement is part of the Restructuring. Since the Restructuring is an important step in preparation for a separate listing of the COP Group and would give the Company an opportunity to proceed with the Spin-Off Plan which would otherwise not be available to the Company for consideration, we are of the view that the BCOHT Agreement is in the interest of the Independent Shareholders.

Since the consideration is determined on a fair and reasonable basis, we are of the view that the terms of the BCOHT Agreement are fair and reasonable so far as the interest of the Company and the Independent Shareholders are concerned.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

B. The COG Restructuring

a. The GCOP Agreement
i. The transaction

COG, an indirect wholly-owned subsidiary of the Company, and COPM, an indirect subsidiary of the Company, agreed to acquire an aggregate of 100% interest in the registered capital in GCOP and all shareholders’ loan in relation to GCOP from COP and SCOP.

ii. Information on GCOP

GCOP was established to engage in property development in the PRC. It has entered into agreements with an independent third party to secure the land use rights in respect of a plot of land situated in Dongshan District, Guangzhou, the PRC and has no other property interest. Since it has not obtained such land use rights, no valuation was made in respect of the property interest of GCOP.

The unaudited net asset value of GCOP as at 31st October, 2003 was RMB19,876,000 (approximately HK$18,751,000).

iii. Consideration

The consideration for the aggregate 100% interest in the registered capital in GCOP will be based on the audited net asset value of GCOP. The consideration for the shareholders’ loan in relation to GCOP will be based on the face value. We consider that the consideration calculated on this basis is fair and reasonable.

Based on the unaudited management accounts of GCOP as at 31st October, 2003, the initial consideration for the aggregate 100% interest in the registered capital in GCOP and the shareholders’ loan in relation to GCOP shall be approximately RMB19,876,000 (approximately HK$18,751,000) and RMB21,000,000 (approximately HK$19,811,000) respectively, which will be adjusted on the basis set out above.

The consideration shall be payable by COG and COPM in cash which will be retained by the COP Group as general working capital.

iv. Financial impact

The initial consideration of approximately RMB40,876,000 (approximately HK$38,562,000) will be financed by the internal resources and existing banking facilities of the Group. Given the cash position of the Group of approximately HK$2.5 billion and a current ratio of approximately 1.78 times as at 30th June, 2003, the acquisition contemplated under the GCOP Agreement would not have material adverse impact on the working capital of the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Since COP is a subsidiary owned as to 79% by a wholly-owned subsidiary of the Company and SCOP is owned as to 75% by COP and as to 25% by a whollyowned subsidiary of the Company (both being the vendors), the Company is acquiring an effective interest of 20.475% under the GCOP Agreement. Based on an effective interest of 20.475% and the initial consideration of approximately RMB40,876,000 (approximately HK$38,562,000), the consideration payable by the Group shall be approximately RMB8,369,361 (approximately HK$7,895,624).

v. Recommendation

The GCOP Agreement is part of the Restructuring. Since the Restructuring is an important step in preparation for a separate listing of the COP Group and would give the Company an opportunity to proceed with the Spin-Off Plan which would otherwise not be available to the Company for consideration, we are of the view that the GCOP Agreement is in the interest of the Independent Shareholders.

Since the consideration is determined on a fair and reasonable basis, we are of the view that the terms of the GCOP Agreement are fair and reasonable so far as the interest of the Company and the Independent Shareholders are concerned.

b. The Lanwan Agreement

i. The transaction

COG, an indirect wholly-owned subsidiary of the Company, and COPM, an indirect subsidiary of the Company, agreed to acquire an aggregate of 100% interest in the registered capital in Guangzhou Lanwan and all shareholders’ loan in relation to Guangzhou Lanwan from COP and SCOP.

ii. Information on Guangzhou Lanwan

The principal asset of Guangzhou Lanwan is a plot of land situated in Panyu District, Guangzhou, the PRC. Further details of such property interest are set out in the Letter from the Board and the valuation report prepared by the Independent Valuer set out in Appendix I to the Circular.

The unaudited net asset value of Guangzhou Lanwan as at 31st October, 2003 was RMB11,531,000 (approximately HK$10,878,000). The property interest of Guangzhou Lanwan, most currently being vacant grass land, was valued by the Independent Valuer at RMB77,000,000 (approximately HK$72,641,509) as at 31st October, 2003.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

iii. Consideration

The consideration for the aggregate 100% interest in the registered capital in Guangzhou Lanwan will be based on the audited net asset value of Guangzhou Lanwan after adjustment for the premium of the valuation of the property interest of Guangzhou Lanwan as at 31st October, 2003 prepared by the Independent Valuer over the estimated initial development cost. The adjustment for the premium will be based on the proportion of the actual cost paid by Guangzhou Lanwan to the total estimated initial development cost.

The consideration for the shareholders’ loan in relation to Guangzhou Lanwan will be based on face value.

We consider that the consideration calculated on the above basis is fair and reasonable.

We have discussed with the Independent Valuer about the basis and assumptions of the valuation and consider them to be reasonable.

We have discussed with the Company about the basis and assumptions of the estimated initial development cost and consider them to be reasonable.

Based on (a) the unaudited net asset value of Guangzhou Lanwan as at 31st October, 2003, (b) the valuation prepared by the Independent Valuer, (c) the estimated initial development cost and (d) the actual cost paid by Guangzhou Lanwan, the initial consideration for the aggregate 100% interest in the registered capital in Guangzhou Lanwan and the shareholders’ loan in relation to Guangzhou Lanwan shall be approximately RMB17,621,000 (approximately HK$16,624,000) and RMB78,800,000 (approximately HK$74,340,000) respectively, which will be adjusted on the basis set out above.

The consideration shall be payable by COG and COPM in cash which will be retained by the COP Group as general working capital.

iv. Financial impact

The initial consideration of approximately RMB96,421,000 (approximately HK$90,963,000) will be financed by the internal resources and existing banking facilities of the Group. Given the cash position of the Group of approximately HK$2.5 billion and a current ratio of approximately 1.78 times as at 30th June, 2003, the acquisition contemplated under the Lanwan Agreement would not have material adverse impact on the working capital of the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Since COP is a subsidiary owned as to 79% by a wholly-owned subsidiary of the Company and SCOP is owned as to 75% by COP and as to 25% by a whollyowned subsidiary of the Company (both being the vendors), the Company is acquiring an effective interest of 20.475% under the Lanwan Agreement. Based on an effective interest of 20.475% and the initial consideration of approximately RMB96,421,000 (approximately HK$90,963,000), the consideration payable by the Group shall be approximately RMB19,742,200 (approximately HK$18,624,717).

v. Recommendation

The Lanwan Agreement is part of the Restructuring. Since the Restructuring is an important step in preparation for a separate listing of the COP Group and would give the Company an opportunity to proceed with the Spin-Off Plan which would otherwise not be available to the Company for consideration, we are of the view that the Lanwan Agreement is in the interest of the Independent Shareholders.

Since the consideration is determined on a fair and reasonable basis, we are of the view that the terms of the Lanwan Agreement are fair and reasonable so far as the interest of the Company and the Independent Shareholders are concerned.

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 of each of the agreements under the Restructuring are fair and reasonable insofar as the Company and the Independent Shareholders are concerned and the Restructuring 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 Restructuring, the Agreements and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of

YU MING INVESTMENT MANAGEMENT LIMITED

Warren Lee

Director

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VALUATION REPORT

APPENDIX I

The following is the text of a letter, summary of valuations and valuation certificate prepared for the purpose of incorporation in this circular received from DTZ Debenham Tie Leung Limited, an independent valuer, in connection with their valuations as at 31 October 2003 of the property interests of the Group subject to the Restructuring.

==> picture [165 x 59] intentionally omitted <==

22nd December, 2003

The Directors

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

Wanchai

Hong Kong

Dear Sirs,

In accordance with your instructions for us to value the property interests as listed in the attached summary of valuations, we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing China Overseas Land & Investment Limited (the “Company”) or its subsidiaries (hereinafter together referred to as the “Group”) in the People’s Republic of China (the “PRC”) with our opinion of the values of such property interests as at 31st October, 2003 (the “date of valuation”).

Our valuation of each the property interests represents its open market value which we would define as intended to mean “an opinion of the best price at which the sale of an interest in a property would have been completed unconditionally for cash consideration on the date of valuation, assuming:–

(a) a willing seller;
(b) that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of price and terms and for the completion of the sale;
(c) that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation;
(d) that no account is taken of any additional bid by a prospective purchaser with a special interest; and
(e) that both parties to the transaction had acted knowledgeably, prudently, and without compulsion.”
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VALUATION REPORT

APPENDIX I

Our valuation has been made on the assumption that the owners sell the property interests on the open market without the benefit of deferred terms contracts, leasebacks, joint ventures, management agreements or any similar arrangements which could serve to affect the value of such property interests.

In the course of our valuation of the property interests in the PRC, we have assumed that transferable land use rights in respect of the property interests for respective specific terms at nominal annual land use fee have been granted and that any premium payable has already been fully paid. We have assumed that the grantees or the users of the property interests have free and uninterrupted rights to use or to assign the property interests for the whole of the respective unexpired terms as granted. We have relied on the advice given by the Group and the Group’s legal advisor on PRC law, Zhong Lun Law Firm, Guangda Law Firm, 廣東人仁律師事務所 (Guangdong Renren Law Firm) and 吉林航程律師事務所 (Jilin Hangcheng Law Firm) regarding the title to each of the property interests and the interests of the Group in the properties.

In forming our opinion of the value of the vacant portions of the property interests in Group I which are held for sale/investment by the Group in the PRC respectively, we have valued them by Direct Comparison Approach assuming sale of the property interests in existing state with the benefit of vacant possession and by making reference to comparable sales evidences as available in the relevant market. In valuing the tenanted portions of the property interests in Group I which are held for investment, we have valued the property interests by Investment Approach by taking into account the current rent passing of the respective property interests with due allowance for the reversionary potential of the respective tenancies.

In valuing the property interests in Group II which are held under development by the Group in the PRC, we have valued each of these property interests on the basis that these properties will be developed and completed in accordance with the Group’s latest development proposals provided to us. We have assumed that approvals for the proposals have been obtained. In arriving at our opinion of value, we have valued them by the Direct Comparison Approach by making reference to comparable sales evidences in the relevant locality. We have also taken into account the construction costs that have already been expended up to the date of valuation and that will be expended to complete the development to reflect the quality of the completed development.

In valuing the property interests in Group III, IV and V, we noted upon our inspection that the site clearance works of portions of the properties have not been fully completed. In accordance to the instructions of the Group, we have, in the course of our valuation, disregarded the said existing structures and prepared our valuation on the basis that each of the properties is a bare site with the benefit of vacant possession. We have value each of the property interests by the Direct Comparison Approach by making reference to comparable sales evidences as available in the relevant market.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property interests nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interests are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values.

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VALUATION REPORT

APPENDIX I

We have been provided with extracts of documents in relation to the title to the property interests in the PRC. However, we have not searched the original documents to ascertain ownership or to verify any amendments which may not appear on the copies handed to us. In the course of our valuation, we have relied to a very considerable extent on the information given to us by the Group and its legal advisers on the PRC law. We have accepted advice given to us on such matters as planning approvals or statutory notice, easements, tenure, identification of properties, development schemes, construction costs, particulars of occupancy, site and floor areas, attributable interest of the Group in the properties and all other relevant matters.

Dimensions, measurements and areas included in the attached valuation certificate are based on information provided to us and are therefore only approximations. We have not been able to carry out onsite measurements to verify the site and floor areas of the properties and we have assumed that the areas shown on the copies of the documents handed to us are correct. We have had no reason to doubt the truth and accuracy of the information provided to us by the Group which is material to the valuations. We were also advised by the Group that no material facts have been omitted from the information supplied. No onsite measurement has been taken.

We have inspected the exterior and, where possible, the interior of the properties. However, we have not carried out investigations on site to determine the suitability of the ground conditions and the services etc. for any future development. Our valuations are prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during the construction period. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report whether the properties are free from rot, infestation or any other structural defects nor were any tests carried out to any of the services. Unless otherwise stated, we have not been able to carry out details on-site measurements to verify the site and floor areas of the properties and we have assumed that the areas shown on the copies of documents handed to us are correct.

We enclose herewith a summary of our valuations and our valuation certificate.

Yours faithfully, for and on behalf of DTZ Debenham Tie Leung Limited Andrew K. F. Chan Registered Professional Surveyor (GP) MSc., M.H.K.I.S., M.R.I.C.S Director

Note: Mr. Andrew K. F. Chan is a Chartered Surveyor who has about 12 years’ experience in the valuation of properties in the People’s Republic of China.

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VALUATION REPORT

APPENDIX I

SUMMARY OF VALUATIONS

			Capital value in
			existing state
	Capital value in	Interest	attributable to
	existing state as at	attributable	the Group as at
Property	31st October, 2003	to the Group	31st October, 2003
	RMB	%	RMB
Group I – Property interests held for sale/investment by the Group in the PRC
1. 150 residential units,	273,033,000	80.05	218,562,917
1 shop unit,
314 car parks situated at
Zhong Hai Fu Yuan (Phase 1)
and a whole block of
composite building
situated at Zhong Hai Fu
Yuan (Phase 2),
No. 37 Zengguang Road,
Haidian District,
Beijing
2. Levels 6-8, 10-16 (Office	120,460,000	84.25	101,487,550
portion) and Level 1 (Retail
portion) of COBD Building,
Unit No. 22A of Vista Height
Block 2 and 221 Car Parks in
Car Park Basement of
Dynasty Court,
No. 399 Fuhua Road,
Futian District,
Shenzhen,
Guangdong Province
Sub-total:	393,493,000		320,050,467

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			Capital value in
			existing state
	Capital value in	Interest	attributable to
	existing state as at	attributable	the Group as at
Property	31st October, 2003	to the Group	31st October, 2003
	RMB	%	RMB
Group II – Property interests held under development by the Group in the PRC
3. The Whole of Zhong	630,000,000	56.04	353,052,000
Hai Kai Xuan Yuan,
Erlong Road,
Xicheng District,
Beijing
4. The Whole of Phase One of	145,000,000	84.25	122,162,500
Zhong Hai Shui An Chun Cheng,
No. 7477 Linhe Street,
Jingyue Development Zone,
Changchun,
Jilin Province
Sub-total:	775,000,000		475,214,500
Group III – Property interests held for future development by the Group in the			PRC
5. 3 plots of land situated at the	118,950,000	84.25	100,215,375
southwest side of Kangle Road,
Silian Village of Henggangzhen,
Longgang District,
Shenzhen,
Guangdong Province
6. A plot of land situated at	700,000,000	75.00	525,000,000
Guang Hua East Li,
Chaoyang District,
Beijing
Sub-total:	818,950,000		625,215,375

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			Capital value in
			existing state
	Capital value in	Interest	attributable to
	existing state as at	attributable	the Group as at
Property	31st October, 2003	to the Group	31st October, 2003
	RMB	%	RMB
Group IV – Property interests proposed to be sold by the Group in the PRC
7. A plot of land situated at the	341,000,000	72	245,520,000
northern side of Dingsi Road,
Changping District,
Beijing
8. A plot of land situated at	380,500,000	95	361,475,000
the southern side of
Guangqumen Road,
Guanyintang Village of
Wansiying Village,
Chaoyang District,
Beijing
9. Plot No. A1 of	301,000,000	100	301,000,000
Xibeiwang New Village,
Zhongguancun,
Haidian District,
Beijing
Sub-total:	1,022,500,000		907,995,000
Group V – Property interests intended	to be purchased by the Group for future development in the PRC
10.A plot of land situated at the	77,000,000	79.53	61,238,100
eastern side of Ruyi Road,
Shangjiao Village,
Dashi Town,
Panyu District,
Guangzhou,
Guangdong Province
Grand total:	3,086,943,000		2,389,713,442

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VALUATIONS CERTIFICATE

Group I – Property interests held for sale/investment by the Group in the PRC

Property

Description and tenure

Capital value in Particulars of existing state as at occupancy 31st October, 2003

150 residential units, 1 shop unit, 314 car parks situated at Zhong Hai Fu Yuan, (Phase 1) and a whole block of composite building situated at Zhong Hai Fu Yuan (Phase 2) No. 37 Zengguang Road, Haidian District, Beijing

Zhong Hai Fu Yuan (Phase 1) comprises 3 blocks of 22-storey and one block of 20-storey residential towers and two levels of car park basement erected on a site with a site area of approximately 24,693.42 sq.m. (265,800 sq.ft.).

Zhong Hai Fu Yuan (Phase 2) comprises one block of 4-storey composite building erected on a site with a site area of approximately 2,735.50 sq.m. (29,445 sq.ft.).

The property was vacant.

RMB273,033,000 (80.05% interest attributable to the Group: RMB218,562,917)

The property comprises 150 residential units, 1 shop unit, a whole block of composite building and 314 car parks situated at the basement level of Zhong Hai Fu Yuan completed in 2003.

As advised by the Group, the approximate gross floor areas of the property are as follows:–

Approximate Property Gross Floor Area sq.m. sq.ft. Phase 1: 150 residential units 28,055.20 301,986 1 shop unit 896.57 9,651 Phase 2: Composite building 4,806.18 51,734 33,757.95 363,371	Approximate Property Gross Floor Area sq.m. sq.ft. Phase 1: 150 residential units 28,055.20 301,986 1 shop unit 896.57 9,651 Phase 2: Composite building 4,806.18 51,734 33,757.95 363,371	Approximate Property Gross Floor Area sq.m. sq.ft. Phase 1: 150 residential units 28,055.20 301,986 1 shop unit 896.57 9,651 Phase 2: Composite building 4,806.18 51,734 33,757.95 363,371
	33,757.95	363,371

314 basement carparks

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Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 31st October, 2003

The land use rights of Zhang Hai Fu Yuan (Phase 1) have been granted for a term of 70 years expiring on 26th June, 2071 for the residential use, 40 years expiring on 26th June, 2041 for ancillary commercial use and 50 years expiring on 26th June, 2051 for basement car parks use whilst the land use rights of Zhong Hai Fu Yuan (Phase 2) have been granted for a term of 40 years expiring on 2nd August, 2043 for ancillary use.

Notes:–

(1) According to Certificate for the Use of Stated-owned Land No. (2001)1763 issued by Beijing Lands Resources Bureau on 24th June, 2002, the land use rights of the property, comprising a total site area of 24,693.42 sq.m., have been granted to Beijing China Overseas Property Development Company Limited for a term expiring on 26th June, 2071 for the residential use, a term expiring on 26th June, 2041 and 26th June, 2051 for the ancillary commercial use and basement car parks use respectively.

According to Certificate for the Use of Stated-owned Land No. (2003) 2410 issued by Beijing Lands Resources Bureau on 14th October, 2003, the land use rights of the property, comprising a site area of 2,735.50 sq.m., have been granted to Beijing China Overseas Property Development Company Limited for a term expiring on 2nd August, 2043 for ancillary use.

(2) According to Grant Contract of Land Use Rights No. (2001)332 entered in between Beijing Lands Resources and Housing Administration Bureau and Beijing China Overseas Property Development Company Limited on 27th June, 2001, the land use rights of the property have been granted to Beijing China Overseas Property Development Company Limited as follows:–

(i)	Site Area	:	32,497	sq.m.
(ii)	Total Gross Floor Area	:	155,800 sq.m.
			(in which 120,858 sq.m. is specified for structures above ground
			whilst	34,942 sq.m. is specified for underground basement car
			parks)
(iii)	Land Use Terms	:	(a)	Residential: 70 years
			(b)	Ancillary commercial: 40 years
			(c)	Basement car parks: 50 years
(iv)	Plot Ratio	:	3.4

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(v) Land Grant Fee : RMB83,782,089 (vi) Annual Land Use Fee : RMB3.0 per sq.m.

According to Grant Contract of Land Use Rights No. (2003) 688 entered in between Beijing Land Resources and Housing Administration Bureau and Beijing China Overseas Property Development Company Limited on 3rd August, 2003, the land use rights of the property have been granted to Beijing China Overseas Property Development Company Limited as follows:–

(i) Site Area : 2,736 sq.m. (ii) Total Gross Floor Area : 6,074 sq.m. (in which 4,820 sq.m. is specified for structures above ground whilst 1,254 sq.m. is specified for underground structures) (iii) Land Use Terms : 40 years for ancillary use (iv) Land Grant Fee : RMB4,964,600

According to the Planning Permit for Construction Works No. 2001(0974) issued by Beijing Planning Committee to Beijing China Overseas Property Development Company Limited on 19th July, 2001. The design scheme of the property comprising a total gross floor area of 168,155.91 sq.m. (in which 143,665.96 sq.m. is specified for residential use and the remaining 24,489.95 sq.m. is specified for basement car parks) has been approved.

According to the Article of Association:–

(i)	Name of joint-venture company	:	Beijing China Overseas Property Development Company Limited
(ii)	Party A	:	Shenzhen China Overseas Property Company Limited
			(a subsidiary of the Company)
	Party B	:	China Overseas Property Group Co., Ltd.
			(a subsidiary of the Company)
(iii)	Registered capital	:	RMB10,000,000 (Party A 20%, Party B 80%)
(iv)	Scope of business	:	Real estate development and sale
(v)	Joint venture period	:	50 years from 22nd March, 2000 to 21st March, 2050
(vi)	Profit sharing	:	Party A 20%, Party B 80%

(5) According to the Business Licence No. 1102281124486 dated 19th June, 2002, Beijing China Overseas Property Development Company Limited has been incorporated with a registered capital of RMB 10,000,000 for a valid operation period from 22nd March, 2000 to 21st March, 2050.
(6)

The opinion of the Group’s PRC legal adviser states that:

(i) According to Certificate for the Use of State-owned Land Nos. (2001) 1763 and (2003) 2410, Beijing China Overseas Property Development Company Limited is in possession of land use rights comprising a total site area of 24,693.42 sq.m. and 2,735.50 sq.m. respectively, due to expiration on 26th June, 2071 for the residential use, 26th June, 2041 for the ancillary commercial use, 26th June, 2051 for the basement car parks use and 2nd August, 2043 for ancillary use;
(ii) Beijing China Overseas Property Development Company Limited is entitled to dispose of the property by any other legal means at no extra land grant fee or land premium;
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(iii) The property is in compliance with the designated uses recorded in the Certificate for the Use of Stateowned Land which have been approved by the relevant authorities; and
(iv) With regard to each property, there is no detection of any acceptances, encumbrances, mortgages, preemption of third party, liens, any other third party interests or any agreement responsible for the above-mentioned conditions. There is also no detection of any lawsuit or arbitration involved in the property or any parts of the property.
(7) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Beijing China Overseas Property Development Company Limited is in possession of a proper legal title to the property and is entitled to transfer the property together with the residual term of its land use rights at no extra land grant fee or land premium payable to the government;
(ii) all land grant fee or land premium have been fully settled;
(iii) the design and construction of the proposed development are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be freely disposed of to other parties.
(8) The status of title and grant of major approvals and licences in accordance with the information provided to us by the Group and the aforesaid legal opinion are as follows:–

Certificate for the Use of State-owned Land Yes Grant Contract of Land Use Rights Yes Planning Permit for Construction Works Yes (Part) Article of Association and Amendment Document Yes Business Licence Yes

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Property

Levels 6-8, 10-16 (Office portion) and Level 1 (Retail portion) of COBD Building, Unit No. 22A of Vista Height Block 2 and 221 Car Parks in Car Park Basement of Dynasty Court, No. 399 Fuhua Road, Futian District, Shenzhen, Guangdong Province

Description and tenure

Dynasty Court comprises four 12-storey, two 30-storey and two 25-storey residential towers, one 14-storey office tower, and two levels of car park basement on a site with total site area of approximately 32,568.50 sq.m. (350,567 sq.ft.)

The property comprises the level 1 (retail portion), Levels 6 to 8 and 10 to 16 (office portion) of COBD Building, and a residential unit (Unit No. 22A) on Level 22 level of Vista Height Block 2 and 221car parks in the car park basement of Dynasty Court completed in 2000.

As advised by the Group, the approximate gross floor areas of the property are as follows:–

Approximate Property Gross Floor Area sq.m. sq.ft. COBD Building Level (Retail) 1,013.18 10,906 Levels 6 to 8 and 10 to 16 (office) 7,953.68 85,613 Vista Height Unit No. 22A 121.55 1,308 9,088.41 97,827	Approximate Property Gross Floor Area sq.m. sq.ft. COBD Building Level (Retail) 1,013.18 10,906 Levels 6 to 8 and 10 to 16 (office) 7,953.68 85,613 Vista Height Unit No. 22A 121.55 1,308 9,088.41 97,827	Approximate Property Gross Floor Area sq.m. sq.ft. COBD Building Level (Retail) 1,013.18 10,906 Levels 6 to 8 and 10 to 16 (office) 7,953.68 85,613 Vista Height Unit No. 22A 121.55 1,308 9,088.41 97,827
	9,088.41	97,827

Particulars of occupancy

The retail portion of the property with a gross floor area of 993.18 sq.m. was leased for a term of 8 years expiring in April, 2009 with an average monthly rent of RMB 138,300.

Levels 6-8 of the office portion with a gross floor area of 3,129.99 sq.m. was leased for a term of 3.25 years expiring in February, 2004 with a monthly rent of RMB 211,274. The remaining office portion on level 10-16 was owner-occupied.

The residential unit was vacant.

Portion of the car parks in the basement car park was licensed on monthly/ daily basis whilst the remaining portion was owner-occupied.

Capital value in existing state as at 31st October, 2003

RMB120,460,000 (84.25% interest attributable to the Group: RMB101,487,550)

The land use rights of the property have been granted for a term of 70 years from 13th February 1998 to 12th February 2068 for residential, office, commercial and ancillary use.

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Notes:–

(1) According to Real Estate Title Certificate No. 3000033924 dated 7th June, 1999, the land use rights of the property, comprising a total site area of 32,568.80 sq.m. have been granted to China Overseas Properties (Shenzhen) Co., Ltd. (subsequently renamed as Shenzhen China Overseas Property Company Limited) for a term of 70 years expiring on 12th February, 2068 for commercial and residential mixed use.
(2) According to Grant Contract of Land Use Rights No. (1998) 001 entered in between Shenzhen Town Planning and Lands Bureau and China Overseas Properties (Shenzhen) Co., Ltd. (subsequently renamed as Shenzhen China Overseas Property Company Limited) on 13th February, 1998, the land use rights of the property, comprising a total site area of 32,568.50 sq.m., have been granted to China Overseas Properties (Shenzhen) Co., Ltd. (subsequently renamed as Shenzhen China Overseas Property Company Limited) for a term of 70 years from from 13th February 1998 to 12th February 2068 for residential, office, commercial and ancillary use.
(3) According to the Article of Association:–
(i) Name of joint-venture company : Shenzhen China Overseas Property Company Limited (ii) Party A : China Overseas Property Group Co., Ltd (a subsidiary of the Company)
Party B : China Overseas (Zhong Guo) Limited (a subsidiary of the Company)
(iii) Registered capital : HK$50,000,000 (Party A 75%, Party B 25%) (iv) Total investment amount : HK$50,000,000 (v) Scope of business : Real estate development and operation (vi) Joint venture period : 20 years from 27th April, 1997 to 27th April, 2017 (vii) Profit sharing : Party A 75%, Party B 25%
(4) According to Business Licence No. 109833 dated 14th January, 2003, Shenzhen China Overseas Property Company Limited has been incorporated with a registered capital of HK$50,000,000 for a valid operation period from 27th April, 1997 to 27th April, 2017.
(5) The retail portion on Level 1, with a gross floor area of 1,013.18 sq.m., is pre-sold to the existing tenant at a consideration of RMB17,507,750.40. In the course of our valuation, we have taken into account the said consideration.
(6) The opinion of the Group’s PRC legal adviser states that:
(i) According to Grant Contract of Land Use Rights No. (1998) 001, Shenzhen China Overseas Property Company Limited is in possession of land use rights of the property;
(ii) Shenzhen China Overseas Property Company Limited is entitled to transfer the property by any other legal means;
(iii) The property is in compliance with the designated uses recorded in the Planning Permit for Land Use Rights which have been approved by the relevant authorities; and
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(7) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Shenzhen China Overseas Property Company Limited is in possession of a proper legal title to the property and is entitled to transfer the property together with the residual term of its land use rights at no extra land grant fee or land premium and other onerous payment payable to the government;
(ii) all land grant fee or land premium have been fully settled;
(iii) the design and construction of the proposed development are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be freely disposed of to other parties.
(8) The status of title and grant of major approvals and licences in accordance with the information provided to us by the Group and the aforesaid legal opinion are as follows:–

Real Estate Title Certificate Yes Grant Contract of Land Use Rights Yes Article of Association Yes Business Licence Yes

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Group II – Property interests held under development by the Group in the PRC

Description and tenure

Property

The Whole of Zhong Hai Kai Xuan Yuan Zhong Hai Kai comprises 5 blocks of 8-storey Xuan Yuan, (and 1 basement level) Erlong Road, residential buildings and two Xicheng District, level of basement car parks on a Beijing piece of land with a site area of approximately 26,623.70 sq.m. (286,578 sq.ft.)

Particulars of occupancy

The property was under construction, and is scheduled to completion in 2004.

Capital value in existing state as at 31st October, 2003

RMB630,000,000 (56.04% interest attributable to the Group: RMB353,052,000)

The property comprises 360 residential units, ancillary commercial portion and 413 car parks situated at the basement level of Zhong Hai Kai Xuan Yuan scheduled to be completed in 2004.

As advised by the Group, the approximate gross floor areas of the property are as follows:–

Property 360 residential units Ancillary commercial	Approximate Gross Floor Area sq.m. sq.ft. 67,445.13 725,979 3,022.00 32,529	Approximate Gross Floor Area sq.m. sq.ft. 67,445.13 725,979 3,022.00 32,529
	70,467.13	758,508

413 basement carparks

The land use rights of the property have been granted for a term of 70 years for the residential use, 50 years for the ancillary and basement carparks uses.

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Notes:–

(1) According to Provisional Certificate for the Use of Stated-owned Land No. (2001) 02659 issued by Beijing Lands Resources and Housing Administration Bureau on 14th June, 2001, the land use rights of the property, comprising a total site area of 26,623.70 sq.m., have been granted to Beijing China Overseas Haoting Property Development Company Limited for a term of 70 years expiring on 10th June, 2071 for the residential use, 50 years expiring on 10th June, 2051 for the ancillary use.
(2) According to Grant Contract of Land Use Rights No. (2001) 320 entered in between Beijing Lands Resources and Housing Administration Bureau and Beijing China Overseas Haoting Property Development Company Limited on 11th June, 2001 and its Supplementary Document dated 20th August, 2003, the land use rights of the property have been granted to Beijing China Overseas Haoting Property Development Company Limited as follows:–

(i)	Site Area	:	26,623.70 sq.m.	26,623.70 sq.m.
(ii)	Total Gross Floor Area	:	101,702 sq.m.
			(a)	Above ground structure: 64,020 sq.m. (including 61,120
				sq.m. for residential use and 2,900 sq.m. for ancillary
				use)
			(b)	Underground structure: 37,682 sq.m. (including 11,029
				sq.m. for car parks and 9,212 sq.m. for refuge use)
(iii)	Land Use Terms	:	(a)	Residential: 70 years
			(b)	Ancillary facilities: 50 years
			(c)	Basement car parks: 50 years
(iv)	Plot Ratio	:	3.03
(v)	Land Grant Fee	:	RMB58,770,707
(vi)	Annual Land Use Fee	:	RMB3.0 per sq.m.

(3) According to Planning Permit for Construction Works No. 2002 (1286) issued by Beijing Planning Committee to Beijing China Overseas Haoting Property Development Company Limited on 27th September, 2002. The design scheme of the property comprising a total gross floor area of 101,702.70 sq.m. has been approved.
(4) According to the Article of Association:–

(i)	Name of joint-venture company	:	Beijing China Overseas Haoting Property Development Company
			Limited
(ii)	Party A	:	Beijing China Overseas Property Development Company Limited
			(a subsidiary of the Company)
	Party B	:	Shenzhen China Overseas Investment Management Co., Ltd.
(iii)	Registered capital	:	RMB10,000,000 (Party A 70%, Party B 30%)
(iv)	Scope of business	:	Real estate development, sales and property management
(v)	Joint venture period	:	50 years
(vi)	Profit sharing	:	Party A 70%, Party B 30%

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(5) According to Business Licence No. 1101091187791 dated 16th August, 2002, Beijing China Overseas Haoting Property Development Company Limited has been incorporated with a registered capital of RMB 10,000,000 for a valid operation period from 20th December, 2000 to 19th December, 2050.
(6) According to the latest information provided by the Group, the construction cost expended on Zhong Hai Kai Xuan Yuan was in the sum of approximately RMB153,960,000 whilst the outstanding costs to complete was in the sum of approximately RMB150,000,000. We have taken into account the said expended construction cost in our valuation.
(7) 20 residential units with a total gross floor area of approximately 3,773.84 sq.m. are pre-sold at a total consideration of RMB48,740,000. In the course of our valuation, we have taken into account the said consideration.
(8) The opinion of the Group’s PRC legal adviser states that:
(i) According to Grant Contract of Land Use Rights No. (2001) 320, Beijing China Overseas Haoting Property Development Company Limited is in possession of land use rights of the property due to expiration on 10th June, 2071 for the residential use and 10th June, 2051 for the ancillary use;
(ii) Beijing China Overseas Haoting Property Development Company Limited has fully settled the land premium, however, portion of the charges as per the payment term has not been fully settled yet. Beijing China Overseas Haoting Property Development Company Limited is entitled to dispose of the property by any other legal means after payment of the outstanding charges;
(iii) The property is in compliance with the designated uses recorded in the Provisional Certificate for the Use of State-owned Land which have been approved by the relevant authorities; and
(iv) With regard to each property, there is no detection of any acceptances, encumbrances, mortgages, preemption of third party, liens, any other third party interests or any agreement responsible for the above-mentioned conditions. There is also no detection of any lawsuit or arbitration involved in the property or any parts of the property.
(9) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Beijing China Overseas Haoting Property Development Company Limited is in possession of a proper legal title to the property and is entitled to transfer the property together with the residual term of its land use rights at no extra land grant fee or land premium payable to the government;
(ii) all land grant fee or land premium have been fully settled;
(iii) the design and construction of the proposed development are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be freely disposed of to other parties.
(10) The status of title and grant of major approvals and licences in accordance with the information provided to us by the Group and the aforesaid legal opinion are as follows:–

Certificate for the Use of State-owned Land (provisional) Yes Grant Contract of Land Use Rights Yes Planning Permit for Construction Works Yes Article of Association Yes Business Licence Yes

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Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 31st October, 2003

The Whole of Zhong Hai Shui An Chun Cheng Phase One of is planned to comprise 26 blocks Zhong Hai Shui An of low-rise residential buildings Chun Cheng, No. on a piece of land with a site 7477 Linhe Street, area of 200,170 sq.m. Jingyue (2,154,630 sq.ft.). Development Zone, Changchun, Jilin As advised by the Group, the Province planned gross floor areas of the property is approximately 192,300 sq.m. (2,069,917 sq.ft.)

The property was under construction, and was scheduled to completion in 2004.

RMB145,000,000 (84.25% interest attributable to the Group: RMB122,162,500)

The land use rights of the property have been granted for a term of 70 years expiring on 12th May, 2073 for residential use.

Notes:–

(1) According to Certificate for the Use of State-owned Land issued by The People’s Government of Changchun, the land use rights of the property, comprising a site area of 200,170 sq.m., have been granted to Changchun China Overseas Property Co., Ltd. for a term expiring on 12th May, 2073 for residential use.
(2) According to Grant Contract of Land Use Rights (2003) 005 issued by Changchun Lands Resources Bureau on 13th May, 2003, the land use rights of the property have been granted to Changchun China Overseas Property Co., Ltd. as follows:–

(i) Site Area : 200,170 sq.m. (ii) Plot Ratio : 1.2 (iii) Land Use Term : Residential: 70 years expiring on 12th May, 2073 (iv) Land Grant Fee : RMB66,000,000

(3) According to Approval for Construction Use of Lands No. 2003 (106) issued by Chengchun Lands Bureau to Changchun China Overseas Property Co., Ltd. on 26th May, 2003, the development of the property comprising a site area of 200,170 sq.m. and a gross floor area of 192,553 sq.m. has been approved.
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(4) According to the Article of Association:–
(i) Name of joint-venture company : Changchun China Overseas Property Co. Ltd. (ii) Party A : China Overseas Property Group Co., Ltd. (a subsidiary of the Company)
Party B : China Overseas (Zhong Guo) Limited (a subsidiary of the Company)
(iii) Registered capital : RMB10,000,000 (Party A 75%, Party B 25%) (iv) Investment capital : RMB14,000,000 (v) Scope of business : Real estate development (vi) Joint venture period : 20 years (vii) Profit sharing : Party A 75%, Party B 25%
(5) According to Business Licence No. 0045714 dated 14th April, 2002, Changchun China Overseas Property Co., Ltd. has been incorporated with a registered capital of RMB10,000,000 for a valid operation period from 25th December, 2002 to 25th December, 2022.
(6) As advised by the Group, portions of the property, with a total gross floor area of 47,399 sq.m., have been pre-sold at a total consideration of RMB109,000,000. In the course of our valuation, we have taken into account the said consideration.
(7) According to the latest information provided by the Group, the construction cost expended on Zhong Hai Shui An Chun Cheng was in the sum of approximately RMB72,000,000 whilst the outstanding cost to complete was in the sum of approximately RMB187,000,000. We have taken into account the said expended construction costs in our valuation.
(8) The opinion of the Group’s PRC legal adviser states that:
(i) Changchun China Overseas Property Co., Ltd. is in possession of land use rights comprising a site area of 200,170 sq.m. due to expiration on 12th May, 2073 for the residential use.
(ii) Changchun China Overseas Property Co., Ltd. has obtained a good title to the land use rights and has fully settled the land grant fee or land premium.
(iii) Changchun China Overseas Property Co., Ltd. is approved to pre-sale the buildings.
(iv) After the buildings are completed, Changchun China Overseas Property Co., Ltd. would be able to apply for Building Ownership Certificate.
(9)

We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–

(i) Changchun China Overseas Property Co., Ltd. is in possession of a proper legal title to the property and is entitled to transfer the property together with the residual term of its land use rights at no extra land premium and other onerous payment payable to the government;
(ii) all land grant fee and premium have been fully settled;
(iii) the design and construction of the proposed development are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be freely disposed of to other parties.
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(10) The status of title and grant of major approvals and licences in accordance with the information provided to us by the Group and the aforesaid legal opinion are as follows:–

Certificate for the Use of State-owned Land Yes Grant Contract of Land Use Rights Yes Approval for Construction Use of Land Yes Article of Association Yes Business Licence Yes

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Group III – Property interests held for future development by the Group in the PRC

Property

Description and tenure

Capital value in Particulars of existing state as at occupancy 31st October, 2003

3 plots of land The property comprises 3 plots situated at the of land having a total site area southwest side of of approximately 219,349.90 Kangle Road, sq.m. (2,361,082 sq.ft.), in Silian Village of which 109,998.6 sq.m. Henggangzhen, (1,184,025 sq.ft.) is specified for Longgang District, commercial and residential use Shenzhen, whilst the remaining portion of Guangdong 109,351.30 sq.m. (1,177,057 Province sq.ft.) is specified for industrial use.

The property was a vacant site.

RMB118,950,000 (84.25% interest attributable to the Group: RMB100,215,375)

As advised by the Group, the commercial and residential site of the property is planned to be developed into a residential compound with approximate gross floor areas as follows:–

Use Residential Commercial Club House Kindergarten Ancillary	Approximate Gross Floor Area sq.m. sq.ft. 136,302 1,467,155 2,800 30,139 200 2,153 3,000 32,292 700 7,535	Approximate Gross Floor Area sq.m. sq.ft. 136,302 1,467,155 2,800 30,139 200 2,153 3,000 32,292 700 7,535
	143,002	1,539,274

1,100 car parks

The land use rights of the commercial and residential site of the property have been granted for a term of 70 years from 23rd September, 2003 to 22nd September, 2073 for commercial and residential uses whilst the land use rights of the industrial site have been granted for a term of 50 years from 28th December, 1995 to 28th December, 2045 for industrial uses.

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Notes:–

(1) According to Real Estate Certificate No. 6000059893 issued by The People’s Government of Shenzhen dated 5th February, 2002, the land use rights of the property, comprising a total site area of 79,111.70 sq.m., have been granted to China Overseas Properties (Shenzhen) Co., Ltd. (subsequently renamed as Shenzhen China Overseas Property Company Limited) for a term of 50 years from 28th December, 1995 to 27th December, 2045 for industrial uses.

According to Real Estate Certificate No. 6000059894 issued by The People’s Government of Shenzhen dated 5th February, 2002, the land use rights of the property, comprising a total site area of 12,295.60 sq.m., have been granted to China Overseas Properties (Shenzhen) Co., Ltd. (subsequently renamed as Shenzhen China Overseas Property Company Limited) for a term of 50 years from 28th December, 1995 to 27th December, 2045 for industrial uses.

According to Real Estate Certificate No. 6000060304 issued by The People’s Government of Shenzhen dated 7th March, 2002, the land use rights of the property, comprising a total site area of 127,942.60 sq.m., have been granted to China Overseas Properties (Shenzhen) Co., Ltd. (subsequently renamed as Shenzhen China Overseas Property Company Limited) for a term of 50 years from 28th December, 1995 to 27th December, 2045 for industrial uses.

(2) According to Agreement of Change of Terms on Grant Contract of Land Use Rights entered in between Shenzhen Planning and Lands Resources Bureau (Party A) and China Overseas Properties (Shenzhen) Co., Ltd. (subsequently renamed as Shenzhen China Overseas Property Company Limited) (Party B) dated 25th September, 2003, the land use terms of the property has been amended as follows:–

(i) Site Area : 219,349.90 sq.m. in which 109,998.60 sq.m. is changed into commercial and residential use, whilst the remaining portion (109,351.30 sq.m.) is remain unchanged as industrial use.
(ii) Land Use Terms : (a) Commercial and residential site (named as Lot No. G07203-0074): 70 years from 23rd September, 2003 to 22nd September, 2073 for commercial and residential use;
(b) Industrial site: 50 years from 28th December, 1995 to 28th December, 2045 for industrial uses
(iii) Extra Land Premium : RMB 32,466,370 (including Land Grant Fee of RMB 3,246,640 and Ancillary Construction Cost of RMB 29,219,730)
(iv) Plot Ratio : Less than 1.3
(3)

According to Planning Permit for Construction Use of Land No. 06-2003-0342 issued by Shenzhen Planning and Lands Resources Bureau Longgang Branch on 28th September, 2003, 25th December, 2001, portion of the property is permitted for the development as a commercial/residential compound as follows:–

(i) Site Area : 110,001.70 sq.m. in which 103,868.70 sq.m. is specified for construction whilst the remaining 6,133.00 sq.m. is specified for road uses.
(ii) Total Gross Floor Area : 143,002 sq.m. (in which 136,302 sq.m. for residential use; 2,800 sq.m. for commercial; 200 sq.m. for club house; 3000 sq.m. for kindergarten; and 700 sq.m. for other ancillary uses)
(iii) Plot Ratio : Less than 1.3
(in which 136,302 sq.m. for residential use; 2,800 sq.m. for commercial; 200 sq.m. for club house; 3000 sq.m. for kindergarten; and 700 sq.m. for other ancillary uses)
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(4) According to the Article of Association:–
(i) Name of joint-venture company : Shenzhen China Overseas Property Company Limited (ii) Party A : China Overseas Property Group Co., Ltd. (a subsidiary of the Company)
Party B : China Overseas (Zhong Guo) Limited (a subsidiary of the Company)
(iii) Registered capital : HK$50,000,000 (Party A 75%, Party B 25%) (iv) Total investment amount : HK$50,000,000 (v) Scope of business : Real estate development and operation (vi) Joint venture period : 20 years from 27th April, 1997 to 27th April, 2017 (vii) Profit sharing : Party A 75%, Party B 25%
(5)
According to Business Licence No. 109833 dated 14th January, 2003, Shenzhen China Overseas Property Company Limited has been incorporated with a registered capital of HK$50,000,000 for a valid operation period from 27th April, 1997 to 27th April, 2017.
(6) The opinion of the Group’s PRC legal adviser states that:
(i) According to Agreement of Change of Terms on Grant Contract of Land Use Rights, Shenzhen China Overseas Property Company Limited is in possession of land use rights comprising a total site area of 219,349.90 sq.m. due to expiration on 22nd September, 2073 for the commercial and residential use whilst 28th December, 2045 for the industrial uses;
(ii) Shenzhen China Overseas Property Company Limited is entitled to dispose of the property by any other legal means;
(iii) The property is in compliance with the designated uses recorded in the Planning Permit for Construction Use of Land which have been approved by the relevant authorities; and
(7) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Shenzhen China Overseas Property Company Limited is in possession of a proper legal title to the property and is entitled to transfer the property together with the residual term of its land use rights at no extra land grant fee or land premium payable to the government;
(ii) all land grant fee or land premium have been fully settled;
(iii) the design and construction of the proposed development are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be freely disposed of to other parties.
(8) The status of title and grant of major approvals and licences in accordance with the information provided to us by the Group and the aforesaid legal opinion are as follows:–

Real Estate Certificate Yes Agreement of Change of Terms on Grant Contract of Land Use Rights Yes Planning Permit for Construction Use of Land Yes Article of Association Yes Business Licence Yes

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Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 31st October, 2003

A plot of land The property comprises a plot of situated at Guang rectangular-shaped site having a Hua East Li, total site area of approximately Chaoyang District, 19,183 sq.m. (206,486 sq.ft.). Beijing

As adviced by the Group, the property is planned to be developed into a composite compound with a total gross floor area of approximately 151,732 sq.m. (1,633,243 sq.ft.) including basement areas.

The property was RMB700,000,000 occupied by various (75% interest blocks of residential and attributable to the commercial buildings Group: pending for site RMB525,000,000) clearance.

The land use rights of the property have been granted for a term of 70 years for residential use, 40 years for commercial use and 50 years for the office and basement carpark uses.

Notes:–

(1) According to Grant Contract of Land Use Rights No. (2003)332 entered in between Beijing Lands Resources and Housing Administration Bureau and Beijing Guo Run Property Development Limited on 3rd April, 2003, the land use rights of the property have been granted to Beijing Guo Run Property Development Limited as follows:–

(i) Site Area : 19,183 sq.m. (ii) Total Gross Floor Area : 151,732 sq.m. (a) Above ground structure: 104,832 sq.m. (including 15,724 sq.m. for residential use, 11,201 sq.m. for commercial and 77,907 sq.m. for office use) (b) Underground structure: 46,900 sq.m. (in which 13,130 sq.m. is specified for car parks) (iii) Land Use Terms : (a) Residential: 70 years (b) Commercial: 40 years (c) Office: 50 years (d) Basement car parks: 50 years (iv) Land Grant Fee : RMB237,474,502

(2) According to Planning Permit for Construction Use of Lands No. 2002 (0489) issued by Beijing Planning Committee to Beijing Guo Run Property Development Limited on 15th November, 2002, the property comprising a total site area of 28,183 sq.m. (in which 19,183sq.m and 9,000 sq.m. are specified for commercial and roads use respectively) is permitted for development.
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(3) According to the Article of Association and its Amendment Document dated 28th July, 2003:–
(i) Name of joint-venture company : Beijing Guo Run Property Development Limited (a subsidiary of the Company)
(ii) Party A : Xihua Industrial Investment Group Co., Ltd. Party B : Beijing Zhong Hai Xing Ye Real Estate Development Co., Ltd. (a subsidiary of the Company)
(ii) Registered capital : RMB30,000,000 (Party A 25%, Party B 75%) (iii) Scope of business : Real estate development and sales (iv) Profit sharing : Party A 25%, Party B 75%
(4) According to Business Licence No. 1100001049336 dated 10th June, 2003, Beijing Guo Run Property Development Limited has been incorporated with a registered capital of RMB30,000,000 for a valid operation period from 13th July, 1999 to 12th July, 2009.
(5) The opinion of the Group’s PRC legal adviser states that:
(i) According to Grant Contract for Land Use Rights No. (2003) 332, Beijing Guo Run Property Development Limited is granted the land use rights comprising a site area of 19,183 sq.m. for a term of 70 years for the residential use, 40 years for the commercial use and 50 years for the office and basement carpark uses. The outstanding land premium is RMB142,484,701, Beijing Guo Run Property Development Limited will obtain a good title to the property after payment of the outstanding land grant fee and land premium.
(ii) Beijing Guo Run Property Development Limited will be entitled to transfer the property by any other legal means after payment of the outstanding land grant fee or land premium;
(6) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Beijing Guo Run Property Development Limited is in possession of a proper legal title to the property and is entitled to transfer the property together with the residual term of its land use rights at no extra land grant fee or land premium payable to the government;
(ii) all land grant fee or land premium have been fully settled;
(iii) the design and construction of the proposed development are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be freely disposed of to other parties.
(7) The status of title and grant of major approvals and licences in accordance with the information provided to us by the Group and the aforesaid legal opinion are as follows:–

Certificate for the Use of State-owned Land No Grant Contract of Land Use Rights Yes Planning Permit for Construction Use of Land Yes Article of Association Yes Business Licence Yes

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Group IV – Property interests proposed to be sold by the Group in the PRC

Property Description and tenure

Capital value in Particulars of existing state as at occupancy 31st October, 2003

A plot of land The property comprises a plot of situated at the irregular-shaped site having a northern side of total area of approximately Dingsi Road, 630,000 sq.m. (6,781,320 sq.ft.). Changping District, Beijing As advised by the Group, the property is planned to be developed into a villa/low-rise apartment residential compound with a total gross floor area of approximately 195,000 sq.m. (2,098,980 sq.ft.).

The property was a RMB341,000,000 (72% vacant grass land. interest attributable to the Group: RMB245,520,000)

Notes:–

(1) According to Approved Design Scheme Notification Letter No. 98GSZ-0370 issued by Beijing Urban Planning Administration Bureau to Beijing Changping Urban Redevelopment Composite Development Co. and Hong Kong Yiye Co., Ltd. (the previous owners) on 12th May, 1998, the design scheme of the property comprising a total site area of 630,000 sq.m. and proposed development of 2-storey villas and 3 to 4-storey apartment blocks with a total planned gross floor area of 195,000 sq.m. has been approved.
(2) According to Business Licence No. QHJZZ No. 017444 dated 29th May, 2003, Beijing Zhonghai Seagarden Real Estate Development Co., Ltd. has been incorporated with a registered capital of US$11,920,000 for a valid operation period from 6th September, 2002 to 5th September, 2042.
(3) The opinion of the Group’s PRC legal adviser states, inter alia, that:

Beijing Zhonghai Seagarden Real Estate Development Co., Ltd. is not in possession of the land use rights comprising a site area of 630,000 sq.m.

Beijing Zhonghai Seagarden Real Estate Development Co., Ltd. has not obtained the approval for operation of real estate business yet.

(4) We would like to iterate that we have not been provided with any legal title document or any legal planning approval document for the aforesaid development scheme of the property. In the course of our valuation, we have, according to the specific instructions of the Group, assumed that proper legal title documents of the property have been issued to the owner and the same has obtained a good title to the property. In addition, we have assumed that the design and construction of the proposed development are in compliance with the local planning regulation and all pre-requisite planning approval documents have been issued to the owner.
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(5) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Beijing Zhonghai Seagarden Real Estate Development Co., Ltd. is in possession of a proper legal title to the property and is entitled to transfer the property together with the residual term of its land use rights at no extra land premium and other onerous payment payable to the government;
(ii) all land premium and costs of resettlement and public utilities services have been fully settled;
(iii) the design and construction of the proposed development are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be freely disposed of to other parties.
(6) The status of title and grant of major approvals and licences in accordance with the information provided to us by the Group and the aforesaid legal opinion are as follows:–

Certificate for the Use of State-owned Land No Planning Permit for Construction Use of Land No Planning Permit for Construction Works No Official Reply to the Project Proposal Yes Business Licence Yes

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Property

Description and tenure

Particulars of

occupancy

Capital value in existing state as at 31st October, 2003

A plot of land The property comprises a plot of situated at the irregular-shaped site having a southern side of total area of approximately Guangqumen 501,400 sq.m. (5,397,070 sq.ft.), Road, Guanyintang in which 353,277 sq.m Village of (3,802,674 sq.ft.) is specified for Wansiying Village, residential and ancillary use. Chaoyang District, Beijing As advised by the Group, the

As advised by the Group, the property is planned to be developed into a residential compound with a total gross floor area of approximately 496,000 sq.m. (5,338,944 sq.ft.).

Notes:–

The property was a vacant grass land.

RMB380,500,000 (95% interest attributable to the Group: RMB361,475,000)

(1) According to Approved Design Scheme Notification Letter No. 2001 GSZ2024 issued by Beijing Planning Committee to Beijing Shenghua Greenland and Real Estate Development Centre (the previous owner) on 22nd February, 2001, the design scheme of the property has been approved. Some of the salient conditions as stipulated in the said letter are summarized as follows:–

(i)	Site Area	:	50.14 Hectares
(ii)	Total Gross Floor Area	:	496,000 sq.m.
			(inclusive of residential and ancillary areas of 451,070 sq.m. and
			45,900 sq.m. respectively)
(iii)	Plot Ratio	:	0.99
(iv)	Population Density	:	204.9 person/Hectare
(v)	Building Height	:	18.15 m to 20.85 m
(vi)	No. of Storey	:	6
(vii)	No. of Car Parking Space	:	1,663
(viii)	Green Ratio	:	38%

(2) According to Planning Permit for Construction Use of Land No. 2001 GDZ0441 issued by Beijing Planning Committee to Beijing Shenghua Greenland and Real Estate Development Centre (the previous owner) on 25th December, 2001, the property comprising a total site area of 353,277 sq.m. is permitted for the development of new village.

(3) According to Reply Letter No. JJTZZ (2002) 784 issued by Beijing Development and Planning Committee (the “Committee”) on 30th April, 2002, the Committee has agreed the development scale of the property to comprise a total gross floor area of 173,307 sq.m. (in which 150,357 sq.m. for commodity residential and 22,950 sq.m. for ancillary facilities).

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(4) According to Business Licence No. 017089 dated 1st November, 2002, Beijing Yili Real Estate Development Co., Ltd. has been incorporated with a registered capital of US$12,000,000 (actual paid amount US$3,600,000) for a valid operation period from 13th June, 2002 to 12th June, 2012.
(5) The opinion of the Group’s PRC legal adviser states that:

Beijing Yili Real Estate Development Co., Ltd. is not in possession of the land use rights comprising a site area of 50.14 hectares.

Beijing Yili Real Estate Development Co., Ltd. has not obtained the approval for operation of real estate business yet.

(6) We would like to iterate that we have not been provided with any legal title document or any legal planning approval document for the aforesaid development scheme of the property. In the course of our valuation, we have, according to the specific instructions of the Group, assumed that proper legal title documents of the property have been issued to the owner and the same has obtained a good title to the property. In addition, we have assumed that the design and construction of the proposed development are in compliance with the local planning regulation and all pre-requisite planning approval documents have been issued to the owner.
(7) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Beijing Yili Real Estate Development Co., Ltd. is in possession of a proper legal title to the property and is entitled to transfer the property together with the residual term of its land use rights at no extra land grant fee or land premium payment payable to the government;
(ii) all land premium and costs of resettlement and public utilities services have been fully settled;
(iii) the design and construction of the proposed development are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be freely disposed of to other parties.
(8) The status of title and grant of major approvals and licences in accordance with the information provided to us by the Group and the aforesaid legal opinion are as follows:–

Certificate for the Use of State-owned Land	No
Planning Permit for Construction Use of Land	No
Planning Permit for Construction Works	No
Official Reply to the Project Proposal	Yes
Business Licence	Yes

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Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 31st October, 2003

Plot No. A1 of The property comprises a plot of Xibeiwang New irregular-shaped site having a Village, total area of approximately Zhongguancun, 96,600 sq.m. (1,039,802 sq.ft.). Haidian District, Beijing As advised by the Group, the property is planned to be developed into a residential compound with approximate gross floor areas as follows:–

The property was prepared for development.

RMB301,000,000 (100% interest attributable to the Group: RMB301,000,000)

Use Residential Ancillary Basement	Approximate Gross Floor Area sq.m. sq.ft. 147,740 1,590,273 980 10,549 17,351 186,766	Approximate Gross Floor Area sq.m. sq.ft. 147,740 1,590,273 980 10,549 17,351 186,766
	166,071	1,787,588

The land use rights of the property have been granted for a term of 70 years for the residential use, 40 years for the ancillary use and 50 years for the basement car parks use.

Notes:–

(1) According to Grant Contract of Land Use Rights No. (03) 981 entered in between Beijing Lands Resources and Housing Administration Bureau and Beijing China Overseas Tiancheng Real Estate Development Co., Ltd. on 3rd November, 2003, the land use rights of the property have been granted to Beijing China Overseas Tiancheng Real Estate Development Co., Ltd. as follows:–
(i) Site Area : 96,600 sq.m. (ii) Gross Floor Area : 166,071 sq.m.

(in which 148,720 sq.m. is specified for structures above ground whilst 17,351 sq.m. is specified for underground structures)

(iii) Land Use Terms : (a) (b) Ancillary (c) (iv) Land Grant Fee : RMB30,183,810

(a) Residential : 70 years (b) Ancillary : 40 years (c) Basement car parks : 50 years
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(2) According to Approval Design Scheme Notification Letter No. 2003 SGZ 0593 issued by Beijing Planning Committee to Beijing China Overseas Tiancheng Real Estate Development Co., Ltd. on 16th July, 2003. The design scheme of the property has been approved. Some of the salient conditions as stipulated in the said letter are summarized as follows:–

(i) Site Area : (ii) Gross Floor Area : (iii) Building Height : (iv) No. of Storey : (v) No. of Car Parking Space : (vi) Green Ratio :	Residential : 60,040 sq.m. Ancillary : 10,660 sq.m. Road : 16,800 sq.m. Green : 9,100 sq.m.
	Total : 96,600 sq.m.

	Residential : 147,740 sq.m. Ancillary : 980 sq.m. Basement : 17,351 sq.m.
	Total : 166,071 sq.m.

	18.3 m to 32.8 m 6 to 11-storey Ground – 352 Basement – 273 36%

(3) According to Business Licence No. 018175 dated 3rd June, 2003, Beijing China Overseas Tiancheng Real Estate Development Co., Ltd. has been incorporated with a registered capital of US$12,000,000 (actual paid amount US$1,800,000) for a valid operation period from 21st March, 2003 to 20th March, 2043.
(4) The opinion of the Group’s legal adviser on PRC law states that:
(i) According to Grant Contract of Land Use Rights No. (03) 981, Beijing China Overseas Tiancheng Real Estate Development Co., Ltd. is granted of the land use rights comprising a site area of 96,600 sq.m. for a term of 70 years for the residential use, 40 years for the ancillary use and 50 years for the basement car parks use. The outstanding land premium is RMB18,110,286, Beijing China Overseas Tiancheng Real Estate Development Co., Ltd. will obtain a good title to the property after payment of the outstanding land grant fee and land premium;
(ii) Beijing China Overseas Tiancheng Real Estate Development Co., Ltd. is entitled to transfer the property by any other legal means after payment of the outstanding land grant fee or land premium;
(5) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Beijing China Overseas Tiancheng Real Estate Development Co., Ltd. is in possession of a proper legal title to the property and is entitled to transfer the property together with the residual term of its land use rights at no extra land grant fee or land premium payable to the government;
(ii) all land premium and costs of resettlement and public utilities services have been fully settled;
(iii) the design and construction of the proposed development are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be freely disposed of to other parties.
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VALUATION REPORT

(6) The status of title and grant of major approvals and licences in accordance with the information provided to us by the Group and the aforesaid legal opinion are as follows:–

Certificate for the Use of State-owned Land No Grant Contract of Land Use Rights Yes Planning Permit for Construction Use of Land No Planning Permit for Construction Works No Business Licence Yes

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Group V – Property interests intended to be purchased by the Group for future development in the PRC

Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 31st October, 2003

A plot of land The property comprises a plot of situated at the irregular-shaped site having a eastern side of total area of approximately Ruyi Road, 32,238 sq.m. (347,010 sq.ft.). Shangjiao Village, Dashi Town, Panyu As advised by the Group, the District, property is planned to be Guangzhou, developed into a residential Guangdong compound with approximate Province

As advised by the Group, the property is planned to be developed into a residential compound with approximate gross floor areas as follows:–

A portion of the property has been occupied by some foundation works while the remaining portions of the property are currently vacant grass land (see Note (1)).

RMB77,000,000 (79.53% interest attributable to the Group: RMB61,238,100)

Use Residential Commercial Ancillary Basement (250 car parking spaces and ancillary facilities)	Approximate Gross Floor Area sq.m. sq.ft. 86,158 927,405 2,000 21,528 2,050 22,066 9,000 96,876	Approximate Gross Floor Area sq.m. sq.ft. 86,158 927,405 2,000 21,528 2,050 22,066 9,000 96,876
	99,208	1,067,875

The land use rights of the property have been granted for a term expiring on 4th August, 2065 for commercial and residential uses.

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Notes:–

(1) We noted upon our inspection that a portion of the property has been occupied by some foundation works. In accordance to the instructions of the Group, we have, in the course of our valuation, disregarded the said foundation works and prepared our valuation on the basis that the property is a bare site with the benefit of immediate vacant possession.
(2) According to Certificate for the Use of Stated-owned Land No. PFGY (2001) ZDGD904-000917 issued by The People’s Government of Panyu District of Guangzhou on 15th June, 2001, the land use rights of the property, comprising a total site area of 32,238 sq.m., have been granted to Guangzhou Panyu Xinhangyuan Real Estate Development Co., Ltd. (subsequently renamed as Guangzhou Lanwan Property Development Ltd.) for a term expiring on 4th August, 2065 for commercial and residential uses.
(3) According to Planning Permit for Construction Use of Land PGDZZ2000 No. 00957 issued by Guangzhou Urban Planning Bureau (Panyu Branch Bureau) to Guangzhou Panyu Xinhangyuan Real Estate Development Co., Ltd. (subsequently renamed as Guangzhou Lanwan Property Development Ltd.) on 24th November, 2000, the property comprising a total site area of 32,238 sq.m. has been approved for the use of commodity residential development.
(4) According to Business Licence No. 4401261100629 dated 28th February, 2003, Guangzhou Panyu Xinhangyuan Real Estate Development Co., Ltd. has been incorporated with a registered capital of RMB15,000,000.

According to Business Licence No. 4401261100629 dated 25th June, 2003, Guangzhou Lanwan Property Development Ltd. (formerly known as Guangzhou Panyu Xinhangyuan Real Estate Development Co., Ltd.) has been incorporated with a registered capital of RMB15,000,000.

(5) The opinion of the Group’s legal adviser on PRC law states that::
(i) Guangzhou Lanwan Property Development Ltd. (formerly known as Guangzhou Panyu Xinhangyuan Real Estate Development Co., Ltd.) is in possession of land use rights comprising a total site area of 32,238 sq.m. due to expiration on 4th August, 2065 for commercial and residential use;
(ii) Guangzhou Lanwan Property Development Ltd. (formerly known as Guangzhou Panyu Xinhangyuan Real Estate Development Co., Ltd.) is entitled to dispose of the property by any other legal means at no extra land grant fee or land premium;
(6) We would like to iterate that we have not been provided with any legal title document (except the aforesaid Certificate for the Use of State-owned Land and Planning Permit for Construction Use of Land issued to Guangzhou Panyu Xinhangyuan Real Estate Development Co., Ltd. (see Notes 2 & 3). In the course of our valuation, we have, according to the specific instructions of the Group, assumed that proper legal title documents of the property have been issued to the owner and the same has obtained a good title to the property. In addition, we have assumed that the design and construction of the proposed development are in compliance with the local planning regulation and all pre-requisite planning approval documents have been issued to the owner.
(7) We have relied on the aforesaid legal opinion and prepared our valuation on the following assumptions:–
(i) Guangzhou Lanwan Property Development Ltd. (formerly known as Guangzhou Panyu Xinhangyuan Real Estate Development Co., Ltd.) is in possession of a proper legal title to the property and is entitled to transfer the property together with the residual term of its land use rights at no extra land grant fee or land premium payable to the government;
(ii) all land grant fee or land premium have been fully settled;
(iii) the design and construction of the proposed development are in compliance with the local planning regulations and have been approved by the relevant authorities; and
(iv) the property may be freely disposed of to other parties.
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(8) The status of title and grant of major approvals and licences in accordance with the information provided to us by the Group and the aforesaid legal opinion are as follows:–

Certificate for the Use of State-owned Land

Yes (Issued to Guangzhou Panyu Xinhangyuan Real Estate Development Co., Ltd.) (subsequently renamed as Guangzhou Lanwan Property Development Ltd.)

Planning Permit for Construction Use of Land

Yes (Issued to Guangzhou Panyu Xinhangyuan Real Estate Development Co., Ltd.) (subsequently renamed as Guangzhou Lanwan Property Development Ltd.)

Planning Permit for Construction Works

Business Licence

Yes

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GENERAL INFORMATION

APPENDIX II

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 with regard to the Company and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts with regard to the Company, the omission of which would make any statement in this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Interests of Directors and Chief Executive

As at the Latest Practicable Date, the interests and short positions of the Directors and the Company’s Chief Executive in the shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO), the Model Code for Securities Transactions by Directors of Listed Companies and which were required to be entered in the register required to be kept under section 352 of the SFO were as follows:

Personal Interests in the Shares

	Number of	Percentage of issued
Name of director	Shares held	share capital
Mr. Sun Wen Jie	2,020,000	0.04%
Mr. Kong Qingping	1,320,000	0.02%
Mr. Yao Peifu	1,400,000	0.03%
Mr. Yao Xiancheng	1,400,000	0.03%
Mr. Cui Duosheng	1,060,000	0.02%
Mr. Wu Jianbin	440,000	0.01%
Mr. Yip Chung Nam	2,200,000	0.04%
Dr. Li Kwok Po, David	200,000	0.004%

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GENERAL INFORMATION

APPENDIX II

Underlying Shares

As at the Latest Practicable Date, the outstanding number of Shares issuable under the share options granted pursuant to the Share Option Scheme to the Directors and the Chief Executive of the Company was 107,110,000 Shares, representing approximately 1.96% of the issued capital of the Company.

						Approximate
						percentage of
						the issued
						share capital
						of the
						Company as
						at the Latest
	Number of shares under options granted on					Practicable
Name of director	17 July 1997	14 Feb. 1998	30 Sep. 1998	4 Jan. 2000	Total	Date
	(Note 1)	(Note 2)	(Note 3)	(Note 4)
Mr. Sun Wen Jie	6,880,000	20,000,000	2,280,000	2,000,000	31,160,000	0.57%
Mr. Kong Qingping	1,000,000	11,000,000	1,380,000	1,600,000	14,980,000	0.27%
Mr. Yao Peifu	3,800,000	15,000,000	1,500,000	1,600,000	21,900,000	0.40%
Mr. Yao Xiancheng	3,800,000	15,000,000	1,500,000	1,600,000	21,900,000	0.40%
Mr. Cui Duosheng	1,000,000	9,000,000	1,080,000	1,360,000	12,440,000	0.23%
Mr. Cheung Shiu Kit	1,000,000	–	–	–	1,000,000	0.02%
Mr. Wu Jianbin	550,000	800,000	540,000	1,040,000	2,930,000	0.05%
Mr. Yip Chung Nam	800,000	–	–	–	800,000	0.01%

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the Company’s Chief Executive, had, under Divisions 7 and 8 of Part XV of the SFO, nor were they taken to or deemed to have under such provisions of the SFO, any interests or short positions in the shares, underlying shares or debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) or any interests which are required to be entered into the register kept by the Company pursuant to section 352 of the SFO or any interests which are required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies in the Listing Rules.

94 -

GENERAL INFORMATION

APPENDIX II

(b) Interests of shareholders discloseable pursuant to the SFO

Save as disclosed below, the Directors are not aware of any other person (other than a Director or Chief Executive of the Company or his/her respective associate(s)) who, as at the Latest Practicable Date, had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

3 of Part XV of the SFO:
			Approximate
			percentage of the
			issued share capital
			of the Company
		Number of	as at the Latest
Name of Shareholder	Nature	Shares held	Practicable Date
China Overseas Holdings	Long Position	3,164,626,800	57.99%
Limited_(Note 5)_
CSCEC_(Note 5)_	Long Position	3,164,626,800	57.99%
J.P. Morgan Chase & Co.	Long Position	380,891,642	6.98%
(Note 6)
J.P. Morgan Chase & Co.	Lending Pool	54,507,742	1.00%
Notes:

(1) The share options were granted at an exercise price of HK$4.06 per Share, exercisable for the period from 17 July 1998 to 16 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 14 February 1999 to 13 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 30 September 1999 to 29 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 4 January 2001 to 3 January 2010 (both days inclusive).
(5) CSCEC owns 100% of China Overseas Holdings Limited and is accordingly deemed by the SFO to be interested in 3,164,626,800 Shares directly owned by China Overseas Holdings Limited.
(6) The shares in which J.P. Morgan Chase & Co. were deemed to be interested, were held via J.P. Morgan Chase Bank, J.P. Morgan Whitefriars Inc., JF Asset Management Limited and JF International Management Inc.

For the latest disclosure of interests filings, they can be found at the “Disclosure of Interests” section at the Stock Exchange’s web-site at www.hkex.com.hk.

95 -

GENERAL INFORMATION

APPENDIX II

(c) Substantial shareholding in other members of the Group

Save as disclosed below, the Directors are not aware of any other person (other than a Director or Chief Executive of the Company or his/her respective associate(s)) who, as at the Latest Practicable Date, was directly or indirectly interested in 10 per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

	Name of	Percentage of
Name of Subsidiaries	substantial shareholders	Shareholdings
Macwan Finance Limited	Brilliant Fortune Properties Limited	20%
（名運財務有限公司）	（旭威置業有限公司）
	Golden Properties Finance Limited	10%
Maxjet Finance Limited	Goldmond Finance Company Limited	10%
（美逸財務有限公司）
Macwan Limited	Rich Tower Properties Limited	20%
（名運有限公司）	（鴻堅置業有限公司）
	Golden Queen International Limited	10%
Maxjet Company Limited	Goldmond Company Limited	10%
（美逸有限公司）
Macfull Finance Limited	Denmore Limited	20%
（名發財務有限公司）
	Smart Winner Development Limited	10%
	（邦永發展有限公司）
	Top Brain Development Limited	10%
	（豐迎置業有限公司）
Macfull Limited	Denmore Limited	20%
（名發有限公司）
	Smart Winner Development Limited	10%
	（邦永發展有限公司）
	Top Brain Development Limited	10%
	（豐迎置業有限公司）
China Overseas Installation	Shanghai Industrial Equipment	35%
Works Limited)	Installation Corp.
（中國海外安裝工程有限公司）	（上海市工業設備安裝公司）
China Overseas – Young’s	Young’s Engineering Holdings Limited	49%
Mechanical & Electrical
Engineering Limited
（中景機電工程有限公司）

96 -

GENERAL INFORMATION

APPENDIX II

	Name of	Percentage of
Name of Subsidiaries	substantial shareholders	Shareholdings
南京中海㷇龍房地產	現代發展有限公司	25%
開發有限公司	(Contemporary Developments
(Nanjing China Overseas Wolong	Ltd.)
Real Estate Development Limited)
南京中海現代房地產	現代發展有限公司	25%
開發有限公司	(Contemporary Developments
(Nanjing China Overseas Xiandai	Ltd.)
Real Estate Development Limited)
深圳市海鵬物業發展	深圳市港鵬基投資	35%
有限公司	發展有限公司
(Shenzhen Haipeng Property	(Shenzhen Gangpengji Investment
Development Limited)	Development Limited)
上海海興房產	上海中城企業集團房地產	49%
有限公司	有限公司
(Shanghai Haixing Real	(Shanghai Zhongcheng Venture
Estate Limited)	Group Real Estate Limited)
上海永菱房地產	Prudential Surplus Limited	30%
有限公司	（佳利盛有限公司）
(Shanghai Winning Property
Development Co., Ltd.)
北京中海廣場房地產	錫華實業投資集團	25%
開發經營有限公司	有限公司
(Beijing Zhonghai Guangchang	(Xihua Industrial Investment
Real Estate Development Limited)	Group Limited)
北京中海海洋花園房	Benefit Sales Limited	28%
地產開發有限公司	（益業有限公司）

(Beijing Zhonghai Seagarden Real Estate Development Co., Ltd.)

97 -

GENERAL INFORMATION

APPENDIX II

Name of Subsidiaries

北京國潤房地產開發經營有限公司 (Beijing Guo Run Property Development Limited)

北京中海豪庭房地產開發有限公司 (Beijing China Overseas Haoting Property Development Company Limited)

深圳市中海運輸有限公司 (Shenzhen China Overseas Freight Co., Ltd.) 深圳市中海資訊科技有限公司 (Shenzhen China Overseas Information Technology Co., Ltd.)

Name of	Percentage of
substantial shareholders Shareholdings
錫華實業投資集團有限公司	25%
(Xihua Industrial Investment
Group Limited)
深圳市中海投資管理有限公司	30%
(Shenzhen China Overseas Investment
Management Co., Ltd.)
深圳市㶅福盛實業有限公司	49%
(Shenzhen Huifusheng Industrial Co.,	Ltd.)
深圳市㶅福盛實業有限公司	38%
(Shenzhen Huifusheng Industrial Co.,	Ltd.)

98 -

GENERAL INFORMATION

APPENDIX II

(d) Material Interests

As at the Latest Practicable Date, none of the Directors had any direct or indirect interests in any assets which have since 31 December 2002 (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 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.

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. MATERIAL CHANGES

Other than the matters set out in the interim results announcement and the interim report of the Company for the half year ended 30 June 2003, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2002, the date to which the latest published audited financial statements of the Company were made up.

4. EXPERTS

(a) The following are the qualifications of the IFA and the Independent Valuer who have given their opinions or advices which are contained in this circular:

Name Qualifications Yu Ming Investment Licensed under the SFO to advise on Management Limited securities and corporate finance, and to deal in securities DTZ Debenham Tie Leung Limited Qualified property valuer

(b) Neither the IFA nor the Independent Valuer has any shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
(c) Each of the IFA and the Independent Valuer 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 they are included.
(d) Neither the IFA nor the Independent Valuer has any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, nor which are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2002, the date to which the latest published audited financial statements of the Company were made up.
99 -

GENERAL INFORMATION

APPENDIX II

(e) The letter of the IFA set out in the section headed “Letter from the Independent Financial Adviser” and the valuation report prepared by the Independent Valuer set out in Appendix I, are given for incorporation in this circular.

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.

6. SERVICE CONTRACTS

There is 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).

7. GENERAL

(a) The secretary of the Company is Mr. Keith Cheung, Solicitor.
(b) The registered office of the Company is at 29th Floor, China Overseas Building, 139 Hennessy Road, Wanchai, Hong Kong. The share registrar of the Company is Standard Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.
(c) 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 up to 10:00 a.m. on Friday, 30 January 2004 at the registered office of the Company at 29th Floor, China Overseas Building, 139 Hennessy Road, Wanchai, Hong Kong:

(a) the Agreements;
(b) the letter from the IFA, the text of which is set out in the section headed “Letter from the Independent Financial Adviser” of this circular;
(c) the valuation report from the Independent Valuer, the text of which is set out in Appendix I; and
(d) the written consents referred to in paragraph 4 in this Appendix II.
100 -

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [32 x 31] intentionally omitted <==

==> picture [285 x 40] intentionally omitted <==

(incorporated in Hong Kong with limited liability)

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of China Overseas Land & Investment Limited (the “ Company ”) will be held at 30th Floor, China Overseas Building, 139 Hennessy Road, Wanchai, Hong Kong on Friday, 30 January 2004 at 10:00 a.m. for the purpose of considering and, if thought fit, passing (with or without amendments) the following resolution:–

ORDINARY RESOLUTION

“ THAT :

(a) the Restructuring, the Agreements (as both terms are defined in the circular to the shareholders of the Company dated 14 January 2004 and copies of the Agreements which have been produced to this meeting respectively marked “A” to “I” and signed by the chairman of this meeting for the purpose of identification) and the transactions contemplated thereunder, be and are hereby approved, confirmed and ratified; and
(b) any one of the directors of the Company (“ Director(s) ”) be and is hereby authorised to do all such further acts and things and execute such further documents and take all steps which in his opinion may be necessary, desirable or expedient to implement and/or give effect to the Restructuring, the Agreements and the transactions contemplated thereunder with any changes as such Director may consider necessary, desirable or expedient.”

By order of the Board

China Overseas Land & Investment Limited

Kong Qingping

Vice Chairman and Chief Executive

Hong Kong, 14 January 2004

101 -

NOTICE OF EXTRAORDINARY GENERAL MEETING

Registered office: 29th Floor, China Overseas Building, 139 Hennessy Road, Wanchai, Hong Kong.

Notes:

A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and, on a poll, vote in his stead. A proxy need not be a member of the Company. A form of proxy for use at the meeting is enclosed herewith.
Where there are joint holders of any share, any one of such joint holders may vote at the meeting, either personally or by proxy, in respect of such share as if he or she were solely entitled thereto, but if more than one of such joint holders be present at the meeting personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.
To be valid, the form of proxy together with any power of attorney or other authority under which it is signed or a notarially certified copy thereof, must be deposited at the office of the Company’s registrar, Standard Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not later than 48 hours before the time appointed for holding the meeting or any adjournment thereof.
Completion and return of the accompanying form of proxy will not preclude members of the Company from attending and voting in person at the meeting or any adjournment thereof should they so wish.
China State Construction Engineering Corporation and its associates (as the term is defined in the Rules Governing the Listing of Securities of the Stock Exchange of Hong Kong Limited) will abstain from voting at the Extraordinary General Meeting.
102 -

AI assistant

Beijing Urban Construction Design & Development Group Co., Limited — Proxy Solicitation & Information Statement 2004

50030_rns_2004-01-14_e4c3b7b0-44eb-404e-a77f-8adb5c5b5859.pdf

CONNECTED TRANSACTIONS

RESTRUCTURING OF THE GROUP’S PROPERTY DEVELOPMENT AND INVESTMENT OPERATIONS IN PRC

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

CONNECTED TRANSACTIONS

RESTRUCTURING OF THE GROUP’S PROPERTY DEVELOPMENT AND INVESTMENT OPERATIONS IN PRC

INTRODUCTION

THE AGREEMENTS

1. THE CCOP AGREEMENT

Parties

Asset Disposed of by the Company to the COP Group

Consideration

Condition and Completion

Information on CCOP

Relationship between the Connected Parties

2. THE SCOP AGREEMENT

Parties

Asset Disposed of by a wholly owned subsidiary of the Group to the COP Group

Consideration

Condition and Completion

Information on SCOP

NJCOP

The SCOP Project

BCOP

Relationship between the Connected Parties

Parties

Asset Disposed of by a wholly owned subsidiary of the Group to the COP Group

Consideration

Conditions and Completion

Information on Beijing Guo Run

Relationship between the Connected Parties

4. THE SEAGARDEN AGREEMENT

Parties

Asset Disposed of by wholly owned subsidiaries of the Group to the COP Group

Consideration

Conditions and Completion

Information on Beijing Seagarden

Relationship between the Connected Parties

THE TIANCHENG AGREEMENT

Parties

Asset Disposed of by wholly owned subsidiaries of the Group to the COP Group

Consideration

Condition and Completion

Information on Beijing Tiancheng

Relationship between the Connected Parties

Parties

Asset Disposed of by a wholly owned subsidiary of the Group to the COP Group

Consideration

LETTER FROM THE BOARD

Condition and Completion

Information on Gain Direct

Relationship between the Connected Parties

Parties

Asset Acquired by the COP Group from a connected person outside the Group

Consideration

Condition and Completion

Information on BCOHT

Relationship between the Connected Parties

8. THE GCOP AGREEMENT

Parties

Asset Acquired by the Group from the COP Group

Consideration

Condition and Completion

Information on GCOP

Relationship between the Connected Parties

9. THE LANWAN AGREEMENT

Parties

Asset Acquired by the Group from the COP Group

Consideration

LETTER FROM THE BOARD

Condition and Completion

Information on Guangzhou Lanwan

Beijing Urban Construction Design & Development Group Co., Limited Proxy Solicitation & Information Statement 2004