Long Investment Corp — Proxy Solicitation & Information Statement 2005

Feb 4, 2005

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 Shui On Construction and Materials Limited, you should at once hand this circular 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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(Stock Code: 983)

DISCLOSEABLE TRANSACTION

ESTABLISHMENT OF A JOINT VENTURE, ACQUISITION OF FIXED ASSETS AND CONTINUING CONNECTED TRANSACTIONS

2 February 2005

* For identification purpose only

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12

– i –

DEFINITIONS

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

Expressions	Meanings
“associates”	has the meaning as ascribed to the term under the Listing
	Rules
“Board”	the board of Directors
“Branch Operations”	the branch company and subsidiaries of GSL in Anshun,
	Guiyang and Hongguo, engaged in cement trading in their
	respective place of establishment
“Company”	Shui On Construction and Materials Limited, a company
	incorporated in Bermuda and listed on the main board of
	the Stock Exchange
“Conditions”	the pre-conditions to SIL’s obligation to contribute to the
	registered capital of the Joint Venture Company
“Director(s)”	the director(s) of the Company
“Framework Agreement”	The framework agreement between the SIL, GSL and GWL
	in relation to the establishment of the Joint Venture
	Company, the Lease and the Branch Operations
“Group”	the Company and its subsidiaries or, where the context so
	requires, any of them
“GSL ”	������������(Guizhou Shuicheng Cement
	Co., Ltd.), an Independent Third Party
“GWL”	�����������(Guizhou Wumengshan
	Development Co., Ltd.), the holding company of GSL and
	an Independent Third Party
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	The Hong Kong Special Administrative Region of the PRC

– 1 –

DEFINITIONS

“Independent Third Party”	an independent third party who, as defined under the Listing
	Rules, is not connected with any of the Directors, chief
	executive or substantial shareholders of the Company, its
	subsidiaries or their respective associates
“Joint Venture Agreement”	the joint venture agreement (in Chinese) dated 23 January
	2005 entered into between GSL and SIL which sets out the
	terms for the establishment of the Joint Venture Company
“Joint Venture Company”	the sino-foreign joint venture company to be set up by SIL
	and GSL under the name of������������
	(Guizhou Shuicheng Shui On Cement Co., Ltd.) on the
	terms of the Framework Agreement
“Latest Practicable Date”	31 January 2005, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information contained herein
“Lease”	the lease of the wet kiln cement manufacturing equipments
	by the Joint Venture Company from GSL and GWL to be
	entered into following the formation of the Joint Venture
	Company
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Memorandum”	the memorandum (in Chinese) dated 21 January 2005
	entered into between SIL, GSL and GWL, which sets out
	the agreement to shorten the term of the Lease from 10
	years to 3 years
“PRC”	the People’s Republic of China, and for the purpose of this
	circular, excluding Hong Kong and the Macau Special
	Administrative Region
“Production Line”	the 2,000 tonne/day dry kiln cement manufacturing
	production line and the land and factory in which such
	production line is located
“RMB”	Renminbi, the lawful currency of the PRC

– 2 –

DEFINITIONS

“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Shareholders”	holders of shares of par value HK$1.00 each in the issued
	share capital of the Company
“SIL”	Sommerset Investments Limited, an indirect wholly owned
	subsidiary of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited

In this Circular, except as otherwise indicated, RMB has been translated into HK$ at the rate of HK$1.00 = RMB1.06 for reference purpose only.

– 3 –

LETTER FROM THE BOARD

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SHUI ON CONSTRUCTION AND MATERIALS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

Executive Directors: Registered Office: Lo Hong Sui, Vincent (Chairman) Clarendon House Wong Ying Wai, Wilfred (Vice-chairman) 2 Church Street Choi Yuk Keung, Lawrence (Vice-chairman) Hamilton HM11 Wong Yuet Leung, Frankie (Chief Executive Officer) Bermuda Wong Fook Lam, Raymond Lowe Hoh Wai Wan, Vivien Head Office:

34th Floor, Shui On Centre Non-executive Directors: 6-8 Harbour Road Wong Hak Wood, Louis Hong Kong Enright, Michael John

Independent non-executive Directors:

Griffiths, Anthony Cheung Kin Tung, Marvin Cheng Mo Chi, Moses

2 February 2005

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

ESTABLISHMENT OF A JOINT VENTURE, ACQUISITION OF FIXED ASSETS AND CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

By an announcement dated 22 December 2004, the Directors announced that on 20 December 2004, SIL, an indirect wholly owned subsidiary of the Company, entered into a Framework Agreement with GSL and GWL whereby SIL agreed in-principle on, among other things, the establishment of the Joint Venture Company with GSL with a term of 50 years to carry out cement

* For identification purpose only

– 4 –

LETTER FROM THE BOARD

manufacturing and trading in the PRC, the acquisition of fixed assets and inventories from GSL and GWL by the Joint Venture Company and the entering of a Lease with GSL and GWL by the Joint Venture Company for the use of fixed assets of GSL and GWL.

In furtherance of the Framework Agreement, SIL has also entered into a Memorandum and the Joint Venture Agreement on 21 and 23 January 2005 respectively.

The purpose of this circular is to provide the Shareholders with further information of the Joint Venture Company, the Framework Agreement, the Joint Venture Agreement and the Lease and other information in compliance with the requirements of the Listing Rules.

THE FRAMEWORK AGREEMENT

Date of the Framework Agreement

20 December 2004

Parties to the Framework Agreement

• (1) SIL, an indirect wholly owned subsidiary of the Company;

• (2) GSL, a company limited by shares incorporated in the PRC with limited liability, which is principally engaged in manufacturing and trading of cement in Guizhou; and

• (3) GWL, a company incorporated in the PRC with limited liability and the holding company of GSL, which is a state-owned enterprise with principal business activities of holding and managing state-owned assets and operations, including cement operations in Guizhou.

To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, each of GSL and GWL and each of whose beneficial owners is an Independent Third Party.

The Joint Venture Company

SIL and GSL agreed to establish the Joint Venture Company as a Sino-foreign joint venture company in the PRC under the name of “������������ Guizhou Shuicheng Shui On Cement Co., Ltd”.

– 5 –

LETTER FROM THE BOARD

Total investment and registered capital

Total investment of the Joint Venture Company is RMB400 million (approximately HK$377 million) which shall include a registered capital of RMB200 million (approximately HK$189 million). The balance of the total investment is expected to be funded by bank loans available to the Joint Venture Company. The registered capital will be contributed by SIL and GSL as follows:

SIL – RMB140 million (approximately HK$132 million) in cash payable within one month of the fulfillment of the Conditions and the issuance of the business registration licence to the Joint Venture Company. Such cash injection will be funded by internal resources and unutilized banking facilities of the Group; and

GSL – RMB60 million (approximately HK$56 million) by way of an injection of the Production Line with a book value of RMB 223 million (approximately HK$210 million) as at 30 September 2004 (based on the accounts of GSL) at cost (subject to a maximum pre-determined amount of RMB260 million, equivalent to approximately HK$245 million) and bank loans of RMB200 million (approximately HK$189 million).

The terms of the capital contribution were determined based on arm’s length negotiation between the parties.

Acquisition

Following the establishment of the Joint Venture Company, the Joint Venture Company will acquire auxiliary fixed assets from GSL and GWL in cement manufacturing and related inventories with a book value of about RMB40.5 million (approximately HK$38.2 million) and RMB18 million (approximately HK$16.9 million) respectively (according to the accounts of GSL and GWL as at 31 December 2003) at a consideration of about RMB83.3 million (approximately HK$78.6 million). The consideration will be adjusted with reference to the cost of any shortfall or increase in the amount of the inventories on completion stocktake from the inventories as at 31 December 2003 and the value of any additional auxiliary fixed assets to be acquired on completion to be agreed by the parties. The consideration is regarded as reasonable and was determined with reference to valuations performed by independent PRC valuers based on arm’s length negotiations between the parties supported by due diligence work performed by the management of the Group. Such consideration will be funded by the cash injection of SIL. GWL and GSL will share in the proceeds of the sale of the auxiliary assets and inventories among themselves as to RMB8.5 million (approximately HK$8.0 million) by GWL and RMB74.8 million (approximately HK$70.6 million) by GSL.

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LETTER FROM THE BOARD

Conditions

The obligation of SIL to contribute to the registered capital of the Joint Venture Company is conditional upon, among other things:

1. GSL having completed the transfer of the Production Line to the Joint Venture Company;

2. GSL having procured and produced the grant of a right to excavate limestone at the quarry located at Xiangshui River, Zhongshan District, Liupanshui City, Guizhou during the term of the Joint Venture Company of 50 years and a lease of the operation site at Xiangshui River, Zhongshan District, Liupanshui City, Guizhou, including the said quarry at Xiangshui River, Zhongshan District, Liupanshui City, Guizhou for an initial term of 20 years with a right of renewal on the same terms to the Joint Venture Company from the relevant government authority in PRC;

3. GSL and GWL having obtained all legal and regulatory PRC approvals for the sale of their auxiliary fixed assets in cement manufacturing and the related inventories to the Joint Venture Company at a consideration of about RMB83.3 million (approximately HK$78.6 million); and

4. GSL having procured and produced the consent of the banks, regarding the extension of the bank loans of RMB200 million (approximately HK$189 million) to be injected by GSL as part of its contribution on the same terms as they are currently available to GSL to the Joint Venture Company.

Board composition

The Joint Venture Company shall have a board of directors comprising ten members. SIL shall be entitled to appoint seven directors and GSL shall be entitled to appoint three directors. The chairman of the board shall be appointed by SIL.

Profit sharing ratio

Profits of the Joint Venture Company will be shared among the shareholders in proportion to their respective shareholdings, i.e.:

SIL: 70% GSL: 30%

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LETTER FROM THE BOARD

Scope of business

The Joint Venture Company will be principally engaged in manufacturing and trading of cement in the PRC.

Term of the joint venture

50 years from the date when the business licence of the Joint Venture Company is issued.

The Lease and other terms of the Framework Agreement

The Framework Agreement will become effective after the approval of the same by the respective board of directors of each party, and in the case of GSL and GWL, by their respective shareholders and the relevant PRC regulatory authorities.

Further to the execution of the Framework Agreement, SIL has on 23 January 2005 entered into the Joint Venture Agreement with GSL setting out detailed terms of the joint venture arrangement as set out in the Framework Agreement.

Under the terms of the Framework Agreement, following the establishment of the Joint Venture Company, the Joint Venture Company will, subject to obtaining the requisite regulatory consents, if any, also enter into the Lease with GSL and GWL whereby GSL and GWL will lease its fixed assets in wet kiln cement manufacturing to the Joint Venture Company for use at an annual rent of RMB1.5 million (approximately HK$1.4 million) for an initial term of 10 years.

Cement operations are long term business and it is normal business practice for cement operations to enter into long term contracts of this type in the PRC to ensure the stability of the production. However, as the Lease will constitute a continuing connected transaction of the Company (as detailed in the section headed “IMPLICATIONS OF THE LISTING RULES”), a term of 10 years will not be in strict compliance with the requirements of rule 14A.35(1) of the Listing Rules which provides that the term must not be more than 3 years.

The Directors have, since the announcement in December 2004, re-discussed with GSL and GWL on the Lease term and in the light of the said requirements under the Listing Rules have, pursuant to the Memorandum, obtained the consent of GSL and GWL to shorten the Lease to a term of 3 years.

The Joint Venture Company will have a right to renew the Lease on the same terms upon expiry of its initial term and it is the intention of each of GSL, GWL and SIL that the Lease will be renewed for an aggregate term of not less than 10 years in total subject to the compliance of the

– 8 –

LETTER FROM THE BOARD

applicable Listing Rules. The consideration was determined based on an arm’s length negotiation between the parties and which the Directors (including the independent non-executive directors) consider to be fair and reasonable and to the interest of the Company as a whole.

GSL further agreed in principle with SIL that it will grant to the Joint Venture Company a right to use its registered trademark “���� ” in its operations free of charge during the term of the Joint Venture Company of 50 years.

SIL also agreed in-principle with GSL that the Joint Venture Company will endeavour to acquire from GSL the Branch Operations when it is legally permissible to do so. The Branch Operations, which are engaged in trading of cement, complement the operation of the Joint Venture Company and will be acquired at a price to be determined by both parties on an arm’s length basis.

REASONS FOR ESTABLISHMENT OF THE JOINT VENTURE COMPANY AND ENTERING INTO THE LEASE

The Group is engaged in cement operations and investment in property development in the Chinese Mainland, construction in Hong Kong and investment in venture capital.

The Directors believes that the strong economic growth and increasing modernization in Guizhou will continue to increase the demand for high-grade cement. Guizhou is of strategic importance in the Central Government’s policy to boost the economic development in the interior regions of China. The recent shortage of energy will further enhance Guizhou as a major “energy” province.

The Directors also believe that there is distinctive growth potential for cement in Guizhou, considering its being a beneficiary of the “Go West” policy and the increasing number of infrastructure projects being undertaken or in the pipeline, e.g. coal power generating plants, roads and railway lines.

The business environment in Guizhou remains positive with most important economic indicators favourably exceeding the national average. The province has been ranked as one of the top provinces benefiting from the Central Government’s injection of funds for infrastructure development.

Over the past few years, the Group has established a strong foothold in various strategic locations in Guizhou such as Zunyi, Qiandongnan and Qianxinan, aiming at building up a dominant position in the high-grade cement market. Recent expansion included acquisitions of cement plants in Bijie and Changda in the west.

– 9 –

LETTER FROM THE BOARD

Luipanshui, where the Joint Venture Company is located, has strategically been the major coal and steel producing town of Guizhou. It is also one of the largest electricity power supply bases in Guizhou, accounting for a significant portion of the electricity source of the province. It also produces a substantial amount of the coal output of Guizhou.

The cement operation of GSL is a major cement operation in Luipanshui and is crucial to substantially complete the Group’s expansion of its cement business in Guizhou. With the establishment of the Joint Venture Company, adding 1.4 million tonne per annum (‘tpa’) to its existing capacities of approximately 2.5 million tpa, the Group will have under its control a total production capacity of roughly 3.9 million tpa of high-grade cement, which represents a significant market share in Guizhou.

It is the intention of the Directors to treat this Joint Venture Company as a jointly controlled entity. As such, upon completion of the transaction, the Group’s interests in jointly controlled entities will increase by RMB140 million (approximately HK$132 million) and the Group’s net current assets (representing current assets less current liabilities) will decrease by the same amount. The impact of the transaction on the future earnings of the Group could not be quantified at this stage.

The Directors consider that the formation of the Joint Venture Company will link up the Group’s cement operations in other parts of Guizhou thereby:

• (a) realizing the synergies created from an integrated operation that will dominate a cement market having a large population; and

• (b) strengthening the position of the Group as a regional operator in the western and southwestern regions of PRC.

The Directors are of the view that the terms of the Framework Agreement, the Memorandum and the Joint Venture Agreement are fair and reasonable and are on normal commercial terms and that the transactions contemplated under the Framework Agreement, the Memorandum and the Joint Venture Agreement are in the interest of Company and its shareholders as a whole.

IMPLICATIONS OF THE LISTING RULES

The establishment of the Joint Venture Company and the acquisition of fixed assets and inventories by the Joint Venture Company will constitute a discloseable transaction of the Company under the Listing Rules.

– 10 –

LETTER FROM THE BOARD

Following the formation of the Joint Venture Company, GSL will become a substantial shareholder of a subsidiary of the Company, i.e. the Joint Venture Company, and a connected person of the Group. Accordingly, the Lease will constitute a continuing connected transaction of the Company.

The Lease is subject to reporting and announcement requirements but as each of the percentage ratios (excluding the profit ratio) is on an annual basis less than 2.5 per cent, it falls within the de minimis exemption of rule 14A.34 of the Listing Rules and is accordingly exempted from shareholder’s approval requirements under rule 14A.34 of the Listing Rules. Details of the Lease will be included in the Company’s next published annual report and accounts and the Company will also comply with rule 14A.35 of the Listing Rules accordingly, and the Lease will be subject to an annual cap of RMB1.5 million (approximately HK$1.4 million). Since the Lease will be shortened to 3 years pursuant to the Memorandum, the Lease will comply with the requirements of rule 14A.35(1) of the Listing Rules and no independent financial adviser will be appointed to opine on the 10-year lease term.

The use of the registered trademark “����” of GSL will constitute an exempt continuing connected transaction of the Company and is exempt from requirements on reporting, announcement and approval from independent shareholders.

The sale and purchase of the Branch Operations, if and when they materialise, will constitute a connected transaction of the Company. The Company will comply with the relevant Listing Rules in respect of such sale and purchase of the Branch Operations.

ADDITIONAL INFORMATION

Your attention is drawn to the general information set out in the Appendix to this circular.

Yours faithfully, By Order of the Board Shui On Construction and Materials Limited Frankie Wong Chief Executive Officer

– 11 –

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular 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 following Directors and chief executive of the Company and their respective associates had the following interests and short positions in the shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which (i) 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 any such Directors and chief executive of the Company was taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange:

Interests in the Shares

	Number of ordinary shares	Number of ordinary shares
	in the Company
Name of Director	Personal Interests	Other Interests
Lo Hong Sui, Vincent	–	185,183,000
Wong Ying Wai, Wilfred	120,000	–
Choi Yuk Keung, Lawrence	602,000	–
Wong Yuet Leung, Frankie	–	–
Wong Fook Lam, Raymond	–	–
Lowe Hoh Wai Wan, Vivien	–	–
Wong Hak Wood, Louis	228,000	–
Enright, Michael John	–	–
Griffiths, Anthony	–	–
Cheung Kin Tung, Marvin	–	–
Cheng Mo Chi, Moses	–	–

Note: The 185,183,000 shares are held as to 166,148,000 shares and 19,035,000 shares by the ultimate holding company, Shui On Company Limited (“SOCL”) and Shui On Finance Company Limited respectively, which is an indirect wholly-owned subsidiary of SOCL. SOCL is owned by the Bosrich Unit Trust. The units of the Bosrich Unit Trust are the property of a discretionary trust of which Mr. Lo Hong Sui, Vincent is a discretionary beneficiary. Accordingly, Mr. Lo Hong Sui, Vincent is deemed to be interested in such shares.

– 12 –

GENERAL INFORMATION

APPENDIX

(b) Share Options of the Company

Following the amendments of Chapter 17 of the Listing Rules on 1st September 2001, the employee share option scheme adopted on 20th January 1997 (the “Old Scheme”) has been terminated and replaced by a new share option scheme on 27th August 2002 (the “New Scheme”). All options granted previously under the Old Scheme continue to be valid and exercisable.

As at the Latest Practicable Date, the following Directors had interests in right of options granted under the Old Scheme and the New Scheme:

			Period during	Number of
		Subscription	which options	ordinary
Name of	Date of	price per	outstanding	shares subject
Director	grant	share	are exercisable	to the options
		HK$
Wong Ying Wai,	27.08.2002	6.00	27.2.2003 to	80,000
Wilfred			26.8.2007
	27.08.2002	6.00	27.8.2005 to	5,000,000**
			26.8.2010
Choi Yuk Keung,	4.7.2000	9.56	4.1.2001 to	70,000
Lawrence			3.7.2005
	17.7.2001	9.30	17.1.2002 to	140,000
			16.7.2006
	27.8.2002	6.00	27.2.2003 to	168,000
			26.8.2007
	27.8.2002	6.00	27.8.2005 to	5,000,000**
			26.8.2010

– 13 –

APPENDIX

GENERAL INFORMATION

			Period during	Number of
		Subscription	which options	ordinary
Name of	Date of	price per	outstanding	shares subject
Director	grant	share	are exercisable	to the options
		HK$
Wong Yuet Leung,	4.7.2000	9.56	4.1.2001 to	200,000
Frankie			3.7.2005
	17.7.2001	9.30	17.1.2002 to	200,000
			16.7.2006
	27.8.2002	6.00	27.2.2003 to	160,000
			26.8.2007
	27.8.2002	6.00	27.8.2005 to	2,000,000**
			26.8.2010
Wong Fook Lam,	4.7.2000	9.56	4.1.2001 to	160,000
Raymond			3.7.2005
	17.7.2001	9.30	17.1.2002 to	160,000
			16.7.2006
	27.8.2002	6.00	27.2.2003 to	110,000
			26.8.2007
	27.8.2002	6.00	27.8.2005 to	2,000,000**
			26.8.2010
Lowe Hoh Wai Wan,	4.7.2000	9.56	4.1.2001 to	160,000
Vivien			3.7.2005
	17.7.2001	9.30	17.1.2002 to	160,000
			16.7.2006
	27.8.2002	6.00	27.2.2003 to	66,000
			26.8.2007
	27.8.2002	6.00	27.8.2005 to	2,000,000**
			26.8.2010

– 14 –

APPENDIX

GENERAL INFORMATION

			Period during	Number of
		Subscription	which options	ordinary
Name of	Date of	price per	outstanding	shares subject
Director	grant	share	are exercisable	to the options
		HK$
Wong Hak Wood,	4.7.2000	9.56	4.1.2001 to	280,000
Louis			3.7.2005
	17.7.2001	9.30	17.1.2002 to	280,000
			16.7.2006
	27.8.2002	6.00	27.2.2003 to	88,000
			26.8.2007
	27.8.2002	6.00	27.8.2005 to	2,000,000**
			26.8.2010

• ** These options were granted under the mega grant as stipulated in the circular dated 30 July 2002. Certain financial and performance targets must be achieved before the options granted will vest and be exercisable.

As at the Latest Practicable Date, 29,058,000 Shares may be issued upon exercise of all outstanding options granted. This represents approximately 11% of the Shares in issue.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had, or was deemed to have interests and short positions in the shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies in the Listing Rules to be notified to the Company and the Stock Exchange.

– 15 –

APPENDIX

GENERAL INFORMATION

(c) 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 interests or short positions 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:

		Percentage of the
	Number of ordinary	issued share capital
Name	shares in the Company	of the Company
Cheah Cheng Hye	16,094,000	5.99%

Of the 16,094,000 shares, 15,632,000 shares are held by Value Partners Limited which is an associate of Mr. Cheah Cheng Hye.

As at the Latest Practicable Date, save as disclosed in this circular, none of the Directors had, or was aware of any person who had, interests or short positions in the shares, underlying shares or debentures which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

(d) 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:

		Effective
Name of owner of shares or equity		% equity
interest (as the case may be)	Name of subsidiary	interest held
����������	Panyu Dynamic Mark Steel &	20%
(Panyu Guang Lu Enterprise Co. Ltd.)	Aluminium Engineering Co. Ltd.
Eversound Enterprise Ltd.	Panyu Dynamic Mark Steel &	16%
	Aluminium Engineering Co. Ltd.

– 16 –

APPENDIX

GENERAL INFORMATION

		Effective
Name of owner of shares or equity		% equity
interest (as the case may be)	Name of subsidiary	interest held
Lung Shing Construction &	Lamma Concrete Products Ltd.	40%
Materials Company Ltd.
Lung Shing Construction &	Guangdong Lamma Concrete	40%
Materials Company Ltd.	Products Limited
����������	Panyu Shui Fai Metal Works	22.5%
(Panyu Guang Lu Enterprise Co. Ltd.)	Engineering Company Limited
Hip Kwan Engineering Co. Ltd.	Panyu Shui Fai Metal Works	22.5%
	Engineering Company Limited
Eversound Enterprise Ltd.	Dynamic Mark Limited	20%
����������	Guang Rui Construction	25%
(Panyu Guang Lu Enterprise Co. Ltd.)	Materials (Panyu) Ltd.
Hip Kwan Engineering Co. Ltd.	Shui Fai Metal Works	22.5%
	Engineering Co. Ltd.
Eversound Enterprise Ltd.	Shui Fai Metal Works	22.5%
	Engineering Co. Ltd.
Jadson Construction Ltd.	Pacific Extend Ltd.	33%*

• The 33% equity interest held by Jadson Construction Ltd. in Pacific Extend Ltd. carries voting right of 20.625%.

(e) Independence

As at the Latest Practicable Date, none of the Directors and their respective associates have any interest in a business apart from the Group’s business, which competes or is likely to compete, directly or indirectly, with the Group’s business and would require disclosure under Rule 8.10 of the Listing Rules.

– 17 –

GENERAL INFORMATION

APPENDIX

3. SERVICE CONTRACTS

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

4. 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, so far as the Directors are aware, no litigation or claim of material importance is pending or threatened against the Company or any of its subsidiaries.

5. GENERAL

• (a) The Qualified Accountant of the Company is Mr. Raymond F L Wong, a fellow of the Institute of Chartered Accountants in England and Wales and a fellow of the Hong Kong Institute of Certified Public Accountants.

• (b) The secretary of the Company is Ms. Janice C W Tam, holder of a master’s degree in science, a fellow of the Association of Chartered Certified Accountants and an associate of the Hong Kong Institute of Certified Public Accountants.

• (c) The principal share registrar and the transfer office of the Company is the Bank of Bermuda Limited, 6 Front Street, Hamilton HM11, Bermuda.

• (d) The Hong Kong branch share registrar and transfer office is Standard Registrars Limited, 28th Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

• (e) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. The head office and principal place of business of the Company is at 34th Floor, Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong.

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

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