Long Investment Corp — Proxy Solicitation & Information Statement 2007

Aug 1, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, 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 and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or 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)

CONNECTED AND DISCLOSEABLE TRANSACTION DISPOSAL OF PARTIAL INTEREST IN SHUI ON LAND LIMITED

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Independent Board Committee is set out on page 12 of this circular.

A letter from Anglo Chinese, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders, is set out on pages 13 to 27 of this circular.

A notice convening the SGM to be held at Room 103, 1st Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong on Friday, 17 August 2007 at 3:00 p.m. is set out on pages 37 and 38 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 head office of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong as soon as possible and, in any event, not later than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting and any adjourned meeting (as the case may be) should you so wish.

* for identification purpose only

31 July 2007

CONTENT

Pages	Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37

— i —

DEFINITIONS

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

• “Anglo Chinese”

“Agreement”

Anglo Chinese Corporate Finance, Limited, a licensed corporation for Types 1 (dealing in securities), 4 (advising on securities), 6 (advising on corporate finance) and 9 (asset management) regulated activities under the SFO; the sale and purchase agreement dated 16 July 2007 entered into between New Rainbow and SOICL in respect of the Disposal;

• “associate”, “connected each has the meaning ascribed to it in the Listing Rules; person(s)”, “substantial shareholder(s)”, “subsidiary”

• “Board”

the board of Directors;

• “Business Day”

a day other than a Saturday or Sunday, on which banks are open in Hong Kong to the general public for business;

• “Company” or “SOCAM”

Shui On Construction and Materials Limited, a company incorporated in Bermuda whose securities are listed on the main board of the Stock Exchange;

“Completion” completion of the sale and purchase of the Sale Shares in accordance with the Agreement;

“Current Market Price” the volume weighted average closing price per SOL Share as quoted on the Stock Exchange for the dealing days commencing from the date of the Agreement and ending on the Determination Date or, if that is not a dealing day, the immediately preceding dealing day, both days inclusive; “Determination Date” 8 August 2007, being the seventh Business Day immediately prior to the date of the SGM;

• “Directors” directors of the Company; “Disposal” the disposal of the Sale Shares by New Rainbow pursuant to the Agreement;

• “Group” the Company and its subsidiaries;

• “HK$” Hong Kong dollars; “Hong Kong” the Hong Kong Special Administrative Region of the PRC;

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DEFINITIONS

• “Independent Board Committee”

the committee of the Board comprising Mr. Anthony Griffiths and Mr. Cheng Mo Chi, Moses, each being independent non-executive Director, formed to advise the Independent Shareholders on whether the terms and conditions of the Agreement are fair and reasonable;

• “Independent Financial Adviser” Anglo Chinese, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the transaction contemplated under the Agreement;

• “Independent Shareholders” shareholders of the Company other than members of the Shui On Group and its associates;

• “Joint Global Coordinators” Deutsche Bank AG, Hong Kong Branch, The Hongkong and Shanghai Banking Corporation Limited and J.P. Morgan Securities (Asia Pacific) Limited, being the joint global coordinators of the global offering of SOL;

• “Latest Practicable Date” 26 July 2007, being the latest practicable date, prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular;

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;

• “Maximum Purchase Price” HK$8.50 per SOL Share;

• “Minimum Purchase Price” the minimum price of HK$7.87 per SOL Share to be paid by SOICL under the Agreement;

• “New Rainbow” New Rainbow Investments Limited, which is a wholly-owned subsidiary of the Company and holds approximately 17.84% of the issued share capital in SOL as at the Latest Practicable Date;

• “PRC”

• “Purchase Price”

• the People’s Republic of China, and for the purpose of this circular, excluding Hong Kong, the Macau Special Administrative Region and Taiwan; the price per SOL Share to be paid by SOICL to New Rainbow for the Sale Shares determined in accordance with the Agreement;

• “Resolution” the ordinary resolution to be proposed at the SGM as set out in the Notice of Special General Meeting which is set out at the end of this circular;

• “RMB”

• Renminbi, the lawful currency of the PRC;

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DEFINITIONS

“Sale Shares”	such number of SOL Shares (rounded to the nearest whole
	number) as shall result from dividing HK$1.8 billion by the
	Purchase Price;
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong);
“SGM”	the special general meeting to be convened by the Company
	to consider the Agreement and the Disposal;
“Shareholders”	holders of the shares of the Company;
“Shui On Group”	SOCL and its subsidiaries;
“SOCL”	Shui On Company Limited, the controlling shareholder
	interested in approximately 59.39% of the issued share capital
	of the Company as at the Latest Practicable Date;
“SOICL”	Shui On Investment Company Limited, a wholly-owned
	subsidiary of SOCL and an investment holding company;
“SOL”	Shui On Land Limited, a company established in the Cayman
	Islands as an exempted company with limited liability whose
	securities are listed on the main board of the Stock Exchange;
“SOL Share(s)”	ordinary share(s) of nominal value US$0.0025 each in the
	capital of SOL;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“US$”	United States dollars, the lawful currency of the United States
	of America;
“£”	pound sterling, the lawful currency of the United Kingdom;
	and
“%”	per cent.

For illustration purpose in this circular, the following conversion rates were adopted:

Conversion of RMB to HK$ is based on the exchange rate of RMB1.00 = HK$1.03

Conversion of £ to HK$ is based on the exchange rate of £1.00 = HK$15.99

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

Executive Directors: Mr. Lo Hong Sui, Vincent (Chairman) Mr. Choi Yuk Keung, Lawrence (Vice-chairman) Mr. Wong Yuet Leung, Frankie (Chief Executive Officer) Mrs. Lowe Hoh Wai Wan, Vivien

Registered Office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Non-executive Director: Professor Michael John Enright

Independent Non-executive Directors: Mr. Anthony Griffiths Mr. Cheng Mo Chi, Moses

Principal place of business in Hong Kong: 34th Floor Shui On Centre 6-8 Harbour Road Hong Kong 31 July 2007

To the Shareholders

Dear Sir or Madam,

CONNECTED AND DISCLOSEABLE TRANSACTION DISPOSAL OF PARTIAL INTEREST IN SHUI ON LAND LIMITED

INTRODUCTION

The Board is pleased to announce that on 16 July 2007, New Rainbow, a wholly-owned subsidiary of the Company, entered into the Agreement with SOICL whereby New Rainbow agreed to sell to SOICL and SOICL agreed to purchase approximately HK$1.8 billion worth of Sale Shares at a price per SOL Share equal to the Purchase Price and subject to the terms of the Agreement.

* for identification purpose only

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LETTER FROM THE BOARD

THE AGREEMENT

Date: 16 July 2007

Parties:

• (1) New Rainbow; and

• (2) SOICL

Sale and purchase

New Rainbow agreed to sell and SOICL agreed to purchase approximately HK$1.8 billion worth of Sale Shares at a price per SOL Share equal to the Purchase Price.

Purchase Price

The Purchase Price shall be determined on the Determination Date, and shall be the higher of the following:

• (i) Minimum Purchase Price — HK$7.87 per SOL Share, being the higher of (A) the closing price per SOL Share as quoted on the Stock Exchange on the date of the Agreement and (B) the volume weighted average closing price per SOL Share as quoted on the Stock Exchange for the consecutive 30 dealing days immediately preceding and including the date of the Agreement; and

• (ii) Current Market Price — being the volume weighted average closing price per SOL Share as quoted on the Stock Exchange for the dealing days commencing from the date of the Agreement and ending on the Determination Date or, if that is not a dealing day, the immediately preceding dealing day, both days inclusive,

PROVIDED that if the Purchase Price exceeds the Maximum Purchase Price of HK$8.50 per SOL Share, SOICL shall have the right to terminate the Agreement by written notice on or before the first Business Day immediately following the Determination Date.

The Minimum Purchase Price and the Maximum Purchase Price of HK$7.87 and HK$8.50 per SOL Share respectively represent:

• (a) a premium of 0% and 8.01% to the closing price of HK$7.87 per SOL Share as quoted on the Stock Exchange on 16 July 2007, being the last dealing date before the signing of the Agreement;

• (b) a discount of 0.53% and a premium of 7.43% over the average closing price of HK$7.91 per SOL Share for the last five (5) dealing days up to and including 16 July 2007; and

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LETTER FROM THE BOARD

• (c) a premium of 3.94% and 12.26% over the average closing price of HK$7.57 per SOL Share for the last fifteen (15) dealing dates up to and including 16 July 2007.

The Purchase Price and the Maximum Purchase Price were determined based on arm’s length negotiation between the parties with reference to the prevailing market price of the SOL Share on the Stock Exchange.

Sale Shares

Based on the Minimum Purchase Price and the Maximum Purchase Price of HK$7.87 and HK$8.50 respectively, up to approximately 228.7 million SOL Shares and 211.8 million SOL Shares may be sold by New Rainbow to SOICL under the Agreement, representing approximately 5.46% and 5.06% respectively of the issued share capital of SOL.

Conditions

Completion is conditional upon (a) the approval of the Independent Shareholders at the SGM for the execution of the Agreement and the Disposal; (b) the Company obtaining the consent of the Joint Global Coordinators to the disposal of Sale Shares by the Group to SOICL; and (c) where applicable, SOICL obtaining a waiver from the Securities and Futures Commission on SOICL’s obligations to make a general offer pursuant to Rule 26 of the Hong Kong Code on Takeovers and Mergers in respect of the transaction contemplated under the Agreement.

As at the Latest Practicable Date, condition (b) had been satisfied. No waiver as contemplated under condition (c) is required as SOICL has no obligation under Rule 26 of the Hong Kong Code on Takeovers and Mergers to make a general offer in respect of the transaction contemplated under the Agreement.

Completion

Completion shall take place within 3 Business Days after the above conditions have been satisfied and in any event shall not be later than 22 August 2007 (or such later date as the parties may agree).

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LETTER FROM THE BOARD

INFORMATION RELATING TO SOL

SOL is one of the leading property developers in the PRC. It engages principally in the development, sale, leasing, management and long-term ownership of high-quality residential, office, retail, entertainment and cultural properties in the PRC.

The net profits (both before and after taxation and extraordinary items) of SOL for the two financial years immediately preceding the Disposal, as extracted from its published audited financial statements are set out below:

				Profit before	Profit after
**Year **	**ended **	**31 **	December	Taxation	Taxation
				(RMB’000)	(RMB’000)
2006				2,585,592	1,639,540
2005				877,542	545,686

The audited net asset values of SOL for the two financial years ended 31 December 2006 were as follows:

As at 31 December	Net asset value
	(RMB’000)
2006	15,164,732
2005	5,061,853

The Group’s interest in SOL is accounted for as “available-for-sale investments” in the Group’s consolidated balance sheet, and the remaining interest will continue to be accounted for as “available-for-sale investments” after Completion.

IMPACT OF AND REASONS FOR THE DISPOSAL

The Group is principally engaged in distressed property development, cement production, construction, investment in property development and venture capital investment in Hong Kong and the PRC.

Impact on the Group’s ownership in SOL

As at the Latest Practicable Date, SOL is owned as to approximately 17.84% by the Group, and as to 35.93% by SOICL and its subsidiaries. Collectively, the Shui On Group holds approximately 53.77% in the issued share capital of SOL through SOICL and its subsidiaries, and the Group.

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LETTER FROM THE BOARD

After Completion, the Group’s interest in SOL will be reduced from approximately 17.84% to approximately 12.38% (assuming the Purchase Price is the Minimum Purchase Price of HK$7.87) and approximately 12.78% (assuming the Purchase Price is the Maximum Purchase Price of HK$8.50). SOICL and its subsidiaries will increase its interest in SOL from approximately 35.93% to approximately 40.99% (assuming the Purchase Price is the Maximum Purchase Price of HK$8.50) and approximately 41.39% (assuming the Purchase Price is the Minimum Purchase Price of HK$7.87). The collective interest of the Shui On Group in SOL will remain unchanged at approximately 53.77%.

Financial Impact on the Group

The Group will record an additional gain from the Disposal, being the difference between the Purchase Price and the carrying value of such shares of HK$6.79 per SOL Share as at 31 December 2006. The actual amount of the gain will be determined on the Determination Date when the Purchase Price and the number of Sale Shares are fixed. Assuming the Purchase Price is the Minimum Purchase Price of HK$7.87 per SOL Share, the gain, before transaction costs, is estimated to be approximately HK$247 million. Assuming the Purchase Price is the Maximum Purchase Price of HK$8.50 per SOL Share, the gain, before transaction costs, is estimated to be approximately HK$362 million. Such gain is expected to be recognised in the Group’s consolidated income statement for the year ending 31 December 2007.

The Company has appointed Deutsche Bank AG, Hong Kong Branch to advise and assist in respect of the Disposal.

The net proceeds after the transaction costs from the Disposal will be used by the Group as its working capital and to repay its existing debts. This will strengthen the Group’s financial position for expanding its core businesses.

Reasons for the Disposal

The Directors (including the independent non-executive Directors) consider that the terms of the Agreement are on normal commercial terms and are fair and reasonable and in the interests of the Shareholders as a whole.

The Directors (including the independent non-executive Directors) also believe that the Disposal is beneficial to the Group and its shareholders as a whole for the following reasons:

• (a) The Disposal allows the Company to rebalance the Group’s investment portfolio, which is presently somewhat concentrated in SOL Shares.

• (b) The Disposal allows the Company to realise its investment in SOL at the closing price per SOL Share as quoted on the Stock Exchange as at the date of the Agreement. The Company will potentially benefit from a premium on the Disposal in the event of any further increase in the market price of SOL Shares following the date of the Agreement.

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LETTER FROM THE BOARD

• (c) A sale of the Sale Shares to SOICL allows the Shui On Group to maintain and further consolidate its control over SOL. This would enhance stability in the management and operation of SOL, and thereby allow the Group to continue to benefit from its growth through its remaining interest in SOL.

• (d) The Group will use a substantial part of the proceeds from the Disposal to repay its bank borrowings, thereby reducing its gearing considerably. This will strengthen the Group’s financial position and allow it to expand its core businesses.

IMPLICATIONS OF THE LISTING RULES

SOICL is a wholly-owned subsidiary of SOCL, the controlling shareholder of the Company. SOCL and SOICL are therefore connected persons of the Company. The applicable percentage ratios for the Disposal exceed 5%. Accordingly, the Disposal constitutes a connected and discloseable transaction for the Company and is subject to the reporting, announcement and independent shareholders’ approval requirements of Chapter 14A of the Listing Rules and the disclosure requirements of Chapter 14 of the Listing Rules.

At the SGM, the Company will seek Independent Shareholders’ approval for the Agreement and the Disposal. The votes to be taken at the SGM will be taken by poll, the results of which will be announced after the SGM.

The Independent Board Committee has been established to advise the Independent Shareholders in respect of the Agreement and Anglo Chinese has been retained as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. Shareholders should consider carefully the recommendations of the Independent Board Committee and the factors, reasons and recommendations in relation to the Agreement.

Shareholders and potential investors should note that the Disposal is subject to a number of conditions and SOICL’s right to terminate the Agreement in the event that the Current Market Price calculated on the Determination Date exceeds the Maximum Purchase Price. The release of this circular does not in any way indicate that the Disposal will be successfully completed. Further announcement will be made to update the Shareholders and investors of the final Purchase Price on or before the fifth Business Day immediately prior to the date of SGM. Shareholders and potential investors should therefore exercise caution when dealing in the securities of the Company.

SPECIAL GENERAL MEETING

A notice convening the SGM to be held at Room 103, 1st Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong on Friday, 17 August 2007 at 3:00 p.m. is set out on pages 37 and 38 of this circular. At the SGM, the Resolution will be proposed to approve the Agreement. In view of the interest of SOCL and its associates in the Agreement, SOCL and its associates, which collectively held approximately 59.39% of the issued share capital of the Company as at the Latest Practicable Date, will abstain from voting at the SGM in this regard.

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LETTER FROM THE BOARD

A proxy form for use at the SGM is enclosed. Whether or not you are able to attend the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the head office of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not prevent you from attending and voting in person at the SGM and any adjourned meeting (as the case may be) if you so wish.

In accordance with Rule 13.39(4) of the Listing Rules, the chairman of the SGM will demand a poll in relation to the Resolution to approve the connected transaction relating to the Agreement. The results of the voting will be announced after the SGM.

PROCEDURES FOR VOTING BY POLL

In accordance with bye-law 66 of the bye-laws of the Company, a resolution put to the vote of a general meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (a) by the chairman of such meeting; or

• (b) by at least three members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or

• (c) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all members having the right to vote at the meeting; or

• (d) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

A demand by a person as proxy for a member or in the case of a member being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a member.

RECOMMENDATION

The Directors (including the independent non-executive Directors) take the view that the transaction contemplated under the Agreement is on normal commercial terms and in the ordinary and usual course of business of the Company; and that the terms and conditions of the Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole. The Directors recommend the Independent Shareholders to vote in favour of the Resolution to be proposed at the SGM.

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LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee to the Independent Shareholders set out on page 12 of this circular, to the letter from Anglo Chinese, the Independent Financial Adviser to the Company’s Independent Board Committee and Independent Shareholders in respect of the Agreement set out on pages 13 to 27 of this circular, and to the information set out in the Appendix to this circular.

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

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Incorporated in Bermuda with limited liability)

(Stock Code : 983)

31 July 2007

To the Independent Shareholder(s)

Dear Sir or Madam,

CONNECTED AND DISCLOSEABLE TRANSACTION DISPOSAL OF PARTIAL INTEREST IN SHUI ON LAND LIMITED

We refer to the circular (the “Circular”) dated 31 July 2007 issued by the Company to its Shareholders of which this letter forms part. Terms defined in the Circular shall have the same meanings when used in this letter, unless the context otherwise requires.

The Independent Board Committee has been formed to advise the Independent Shareholders as to whether, in its opinion, the terms of the transaction contemplated under the Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Anglo Chinese has been appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the transaction contemplated under the Agreement.

We wish to draw your attention to the letter from the Board, as set out on pages 4 to 11 of this Circular and the text of a letter of advice from Anglo Chinese, as set out on pages 13 to 27 of this Circular, both of which provide details of the Agreement.

Having considered the terms of the Agreement, the advice of Anglo Chinese and the relevant information contained in the letter from the Board, we are of the opinion that the terms of the transaction contemplated under the Agreement are fair and reasonable so far as the Independent Shareholders are concerned and that the transaction contemplated under the Agreement is in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote in favour of the Resolution, which will be proposed as an ordinary resolution at the SGM.

Yours faithfully,

Independent Board Committee of

Shui On Construction and Materials Limited

Anthony Griffiths Independent Non-executive Director

Cheng Mo Chi, Moses Independent Non-executive Director

* for identification purpose only

— 12 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

ANGLO CHINESE CORPORATE FINANCE, LIMITED

www.anglochinesegroup.com

40th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong.

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The Independent Board Committee and the Independent Shareholders Shui On Construction and Materials Limited 34/F., Shui On Centre 6-8 Harbour Road Hong Kong

31st July, 2007

Dear Sirs,

Disposal of partial interest in Shui On Land Limited

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Agreement. Details of the Agreement are contained in the circular from the Company dated 31st July, 2007 (the “Circular”) of which this letter forms a part. Expressions used in this letter have the same meanings as defined in the Circular unless the context requires otherwise.

The Agreement gives rise to a connected and discloseable transaction for the Company under Chapters 14A and 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements set out therein and requires the approval of Independent Shareholders in the prescribed manner.

The connected and discloseable transaction arises because SOICL, which is purchasing the Sale Shares in terms of the Agreement, is a wholly owned subsidiary of SOCL, which is the controlling shareholder of the Company. SOICL and SOCL are therefore connected persons of the Company under the Listing Rules.

The Independent Board Committee comprising both of the Company’s independent non executive directors namely, Mr. Anthony Griffiths and Mr. Cheng Mo Chi, Moses has been formed to consider whether the Agreement is on normal commercial terms, in the ordinary and usual course of business and is fair and reasonable and in the interests of the Company and its Shareholders as a whole. We have been appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Agreement.

In formulating our opinion and recommendation, we have relied on the information and facts supplied to us by the Company and the opinions expressed by the Directors. We have assumed that the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

information and representations contained or referred to in the Circular were true and accurate at the time they were made and continued to be so at the date of the despatch of the Circular. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. We have also been advised by the Directors that and believe that no material facts have been omitted from the Circular. However, we have not conducted an independent investigation into the affairs of the Company or SOL or verified any of the information that we have considered or that has been provided to us.

We consider we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation.

Apart from normal professional fees for our services to the Company in connection with this appointment, no arrangement exists whereby Anglo Chinese will receive any benefits from the Company or any of its associates.

PRINCIPAL FACTORS

We have set out below the principal factors that we have taken into account in arriving at our advice to the Independent Board Committee and to Independent Shareholders.

The nature of the Group’s business

The Group is primarily engaged in the following business:

• investment in property development in Mainland China, through SOL and investment in and development of distressed properties in Mainland China through China Central Properties Limited (“CCP”);

• cement manufacturing and sales through a joint venture with Lafarge S.A., and other cement operations in Mainland China;

• venture capital investment in Mainland China and Hong Kong; and

• construction, construction management and fitting out in Hong Kong, Macau and Mainland China.

The businesses compliment one another either in the field of property development or in investment disciplines such that the Group is both an active operator of businesses and an opportunistic or strategic investor in them.

The investment in SOL Shares is categorised as “available-for-sale investments” in the books of account of the Group at its carrying value and is treated as an investment asset such that the results of SOL are not reflected in the consolidated accounts of the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The make up of the Group’s business

As at 31st December, 2006 the make up of the Group’s business as published in its annual report for 2006 was as follows:

Total Assets HK$ SOL Shares Distressed property development Cement Venture capital investments Construction Bank balances and others Total	millions Approx. 5,070 443 2,651 608 723 851 10,346	per cent 49.0 4.3 25.6 5.9 7.0 8.2
		100.0

The Group’s largest asset is its investment in SOL which is a relatively passive investment and makes up the greatest part of the Group’s assets. SOL Shares contribute to the cash income of the Group through dividends and the carrying value of the SOL Shares is marked to market in the books of account of the Group when its interim and annual report are prepared as at 30th June and 31st December respectively in each year. Any rise or fall in the carrying value of SOL Shares does not produce or drawdown any cash for or from the Group.

The Group’s balance sheet

The Group’s latest published consolidated balance sheet at 31st December, 2006 shows total assets of approximately HK$10,345.8 million and current liabilities of approximately HK$3,744.2 million and non current liabilities of approximately HK$1,385.5 million or aggregate liabilities of approximately HK$5,129.7 million. Shareholders funds and minority interests were approximately HK$5,216.1 million. Non current assets held for sale were HK$31.0 million and free cash balances were approximately HK$64.8 million.

Since then, the Group has made a substantial investment of US$25 million in convertible bonds issued by CCP, subscribed approximately £63 million for new shares in CCP and exchanged its distressed property investments in Mainland China for shares in CCP which are subject to a 12 month lock up following the admission of shares in CCP to the AIM Market of the London Stock Exchange. Bank borrowings financed the additional cash investment in CCP. In addition, the price of SOL Shares has risen from HK$6.79 as at 31st December, 2006 to HK$8.43 as at the Latest Practicable Date.

Since 31st December, 2006 the Group also borrowed a further HK$507.7 million to invest in the Dalian Software Park Phase II in terms of the circular sent to the Company’s Shareholders dated 4th June, 2007 and borrowed further to increase its investment in its cement operations.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We conclude from a review of the Group’s consolidated balance sheet and subsequent events that the Group’s financial leverage or gearing, although not excessive can be usefully reduced by the disposal of the Sale Shares and provide the balance sheet with a new source of working capital which it otherwise lacks. In our opinion, the Group is presently fully invested unless it increases gearing and its risk profile accordingly.

Following the disposal of the Sale Shares the residual shareholding will remain catagorised as “available-for-sale investments” in the books of account of the Group.

The make up of the Group’s earnings and cash flow

From our review of the 2006 annual report and discussions with the Directors we conclude that the greater part of the Group’s earnings arose from the capital appreciation of its investment in SOL and since then the principal sources of revenue for the Group will be capital appreciation on the sale of and dividends from its investments and earnings from its construction and cement related businesses. Based on the announced dividend policy of SOL and CCP, the actual dividends receivable in the foreseeable future from these investments will represent a cash yield that is lower than the cost of borrowing making the realisation of capital appreciation from the sale of investments an important aspect of the Group’s business and its primary source of cash flow.

Background on SOL

The Group invested in SOL in 2004 subscribing US$50 million for convertible redeemable participating junior preference shares of US$0.01 each issued by SOL and was issued 130,000,000 ordinary shares in the capital of SOL as consideration for the sale to SOL of a subsidiary which holds the development rights for the Rui Hong Xin Cheng project in Shanghai. The ordinary shares in the capital of SOL were subdivided into SOL Shares.

SOL Shares were listed on the Stock Exchange on 4th October, 2006 and upon that listing the Group’s interest in convertible redeemable participating junior preference shares were exchanged for SOL Shares. These SOL Shares were listed at the issue price of HK$5.35 per SOL Share. Presently, the Group through New Rainbow holds 746,695,324 SOL Shares representing (approximately) 17.8 per cent of the issued SOL Shares.

SOL’s business is property development in Mainland China where it is one of the leading property development companies. SOL focuses primarily on investing in projects which are long term in nature and large in scale and built in phases and for multiple uses. These include large scale master planned city centre and integrated residential development projects including premium commercial properties.

Presently SOL’s portfolio comprises seven multi phase projects in various stages of development. These are:

• the Shanghai Taipingqiao project;

• the Shanghai Rui Hong Xin Cheng project;

— 16 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• the Shanghai Knowledge and Innovation Community project;

• the Chongqing Tiandi project;

• the Wuhun Hankou Tiandi project;

• the Hangzhou Xihu Tiandi project; and

• the Dalian Software Park Phase II project.

Details of these projects are set out in the SOL listing document dated 20th September, 2006, SOL’s annual report for 2006 and in the circular to shareholders of SOL dated 4th June, 2007 in respect of the Dalian Software Park Phase II project.

As at the Latest Practicable Date, SOL had a stock market capitalisation of about HK$35,284.6 million.

China Central Properties Limited

The Group has created a listed vehicle through which to expand and conduct investment in distressed property assets in Mainland China and accordingly the disposal of the Sale Shares will not significantly reduce the Group’s exposure to property development in Mainland China but rather will rebalance the portfolio of exposures to it.

CCP raised about £179.6 million from a placing of new shares in CCP and US$200 million from an issue of convertible bonds. The Group’s interest in CCP is about 40 per cent of its shares falling to about 34.6 per cent on full conversion of convertible bonds issued by CCP and held by the Group and others. The admission document of CCP estimates the gross floor area of the initial portfolio of eight properties at 560,670 square metres. CCP has a different business model to that of SOL since CCP concentrates primarily on investing in medium to large partially completed property projects in major and secondary cities in Mainland China where projects become available as a result of their current owners’ financial constraints. This business therefore has a much shorter investment time frame than the long term projects undertaken by SOL.

As the Latest Practicable Date, the stock market capitalisation of CCP was £315.0 million or about HK$5,037.3 million.

— 17 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Past performance of SOL Shares and of the Company’s shares measured against each other and against relevant indices

Chart 1: SOCAM and SOL

- performance vs Hang Seng Index (“HSI”) and

Hang Seng China Enterprise Index (“HSCEI”) since October 2006

==> picture [424 x 352] intentionally omitted <==

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

100.0
90.0 SOCAM
80.0
SOL
70.0
HSI
60.0
HSCEI
50.0
40.0
30.0
20.0
10.0
0.0
-10.0
Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07
500,000,000
Volume - SOCAM
250,000,000
0
4,000,000
Volume - SOL
2,000,000
0
Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07
% change
----- End of picture text -----

Source: Bloomberg

— 18 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Chart 2: SOL - performance against HSI and HSCEI since October 2006

==> picture [421 x 309] intentionally omitted <==

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

100.00
90.00 SOL
80.00 HSI
70.00
HSCEI
60.00
50.00
40.00
30.00
20.00
10.00
0.00
-10.00
Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07
500,000,000
Volume - SOL
250,000,000
0
Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07
% change
----- End of picture text -----

Source: Bloomberg

— 19 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Chart 3: SOCAM - 1-year performance against HSI and HSCEI

==> picture [424 x 168] intentionally omitted <==

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

120.00
SOCAM
100.00
HSI
80.00
HSCEI
60.00
40.00
20.00
0.00
-20.00
Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07
% change
----- End of picture text -----

==> picture [422 x 76] intentionally omitted <==

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

4,000,000
Volume - SOCAM
2,000,000
0
Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07
----- End of picture text -----

Source: Bloomberg

— 20 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Chart 4: SOCAM - 5-year performance against HSI and HSCEI

==> picture [430 x 294] intentionally omitted <==

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

700.00
SOCAM
600.00
HSI
500.00
HSCEI
400.00
300.00
200.00
100.00
0.00
-100.00
Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07
6,000,000
Volume - SOCAM
4,000,000
2,000,000
0
Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07
% change
----- End of picture text -----

Source: Bloomberg

Since listing in October, 2006 and as at the Latest Practicable Date, the average daily volume in SOL Shares has been approximately 18.6 million SOL Shares per day.

Shares in SOL performed well upon listing but have lagged the surging HSCEI index since December, 2006 although outperforming the HSI index. Shares in the Company have performed extremely well against both indices and SOL since May, 2007.

Key considerations surrounding the Purchase Price

The following are important in assessing the underlying value of SOL Shares.

— 21 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The market price

• SOL Shares were listed in October, 2006 at HK$5.35 per SOL Share, since then the price has risen to HK$8.43 as at the Latest Practicable Date, a gain of about 57.6 per cent.

• The premium or discount at which the disposal of the Sale Shares will take place is set out below under the heading “Premium or discount to the market price for SOL Shares�”

Normal market comparable discounts for placings of this type of which a sample is set out below.

Table 1: Share placements of listed companies in Hong Kong

							Premium / (discount) to	Premium / (discount) to	Premium / (discount) to
		Pricing	Amount	Amount	Offer	Shares	Last	5-day	10-day
Stock code	Issuer	date	raised	raised	price	offered	trade	VWAP	VWAP
			(US$m)	(HK$m)	(HK$)	(m)
813	Shimao Property Holdings Ltd	04-May-07	699.1	5,468.5	17.88	305.8	(5.1%)	1.5%	0.6%
3900	Greentown China Holdings Ltd	03-May-07	295.8	2,313.5	16.35	141.5	(3.8%)	2.3%	3.7%
272	SOL	10-Apr-07	48.0	375.3	6.12	61.3	(3.6%)	(3.4%)	(4.6%)
3383	Agile Property Ltd	10-Nov-06	244.5	1,906.7	6.80	280.4	(4.2%)	(3.0%)	(1.5%)
754	Hopson Development Holdings Ltd	03-Nov-06	127.7	996.0	16.60	60.0	(4.7%)	(0.7%)	(3.7%)
2868	Beijing Capital Land Ltd	25-Oct-06	123.4	961.0	2.80	343.2	(13.3%)	(12.5%)	(8.4%)
2777	Guangzhou R&F Properties Ltd	21-Sep-06	207.6	1,615.9	38.20	42.3	(5.0%)	(5.1%)	(5.8%)
1109	China Resources Land Ltd	20-Jan-06	144.2	1,119.0	3.73	300.0	(7.9%)	3.0%	6.3%
Minimum							(13.3%)	(12.5%)	(8.4%)
Mean							(5.9%)	(2.2%)	(1.7%)
Median							(4.8%)	(1.9%)	(2.6%)
Maximum							(3.6%)	3.0%	6.3%

Source: Bloomberg, Stock Exchange of Hong Kong

Note: Over the previous 18 months, numerous share placements have been made by companies listed on the Stock Exchange. This list has selected only those placings by companies which engage in property related businesses in general. VWAP means the volume weighted average price.

— 22 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The pricing by the market of companies which we consider are comparable and trading on the Stock Exchange.

Table 2: SOL comparable companies

				2006A
		Market	Last	Earnings	2006A	2007E	Dividend
Stock code	Company name	capitalisation	price	growth	P/Book	P/Book	yield
		(HK$m)	(HK$)	(%)	(x)	(x)	(%)
272	SOL	32,937	7.9	201.6	2.4	2.5	0.7
813	Shimao Property Holdings Ltd	65,031	19.7	151.0	5.1	4.5	1.0
1109	China Resources Land Ltd	47,633	12.7	123.3	4.0	3.5	0.5
588	Beijing North Star Co	32,177	5.3	56.0	2.1	2.0	0.7
917	New World China Land Ltd	28,151	7.4	346.0	1.3	1.3	0.7
3900	Greentown China Holdings Ltd	26,277	17.3	103.8	5.3	4.2	2.0
Minimum				56.0	1.3	1.3	0.5
Mean				163.6	3.4	3.0	1.0
Median				137.1	3.2	3.0	0.7
Maximum				346.0	5.3	4.5	2.0

Source: Bloomberg (as at 16th July, 2007)

Notes: The list has been selected taking into consideration the type of property development, principal location of properties and market capitalisation.

2006A based on actual figures for the year ended 31st December, 2006 (New World China Land Ltd based on year ended 30th June, 2006).

2007E based on Bloomberg Estimates for the year ending 31st December, 2007 (New World China Land Ltd based on year ended 30th June, 2007).

The Minimum Purchase Price is not out of line with the price of shares in comparable companies.

We do not regard “A” shares issued by comparable property development companies in Mainland China as a relevant comparison since the “A” share market is subject to market forces not present in the Stock Exchange and not applicable to companies listed there.

The book value of SOL Shares

As at 31st December, 2006 the consolidated net tangible asset value per SOL Share was about RMB3.33 per Share, equivalent to about HK$3.43 per SOL Share. Forward looking analysis by market participants provides a market consensus of about HK$8.35 per SOL Share for consolidated net tangible assets per SOL Share for the 2007 financial year[1] .

The earnings yield per SOL Share

For the year ended 31st December, 2006, the basic earnings per SOL Share was about RMB0.48 equivalent to about HK$0.49 per SOL Share, an earnings yield of about 6.2 per cent at the Minimum Purchase Price or about 5.8 per cent at the Maximum Purchase Price.

1 Figure compiled from analysts’ reports of Deutsche Bank, HSBC and JP Morgan, which were the joint lead managers for the listing of SOL.

— 23 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The dividend yield per SOL Share

To date only a final dividend has been paid and was received as HK$0.06 per SOL Share in June, 2007.

This payment represented a cash yield of about 0.76 per cent at the Minimum Purchase Price and about 0.71 per cent at the Maximum Purchase Price.

Premium or discount to the market price for SOL Shares arising from the disposal of the Sale Shares

The Minimum Purchase Price and the Maximum Purchase Price of HK$7.87 and HK$8.50 per SOL Share respectively represent:

• (a) a premium of 0% and 8.01% to the closing price of HK$7.87 per SOL Share as quoted on the Stock Exchange on 16th July, 2007, being the last dealing date before the signing of the Agreement;

• (b) a discount of 0.53% and a premium of 7.43% over the average closing price of HK$7.91 per SOL Share for the last five (5) dealing days up to and including 16th July, 2007; and

• (c) a premium of 3.94% and 12.26% over the average closing price of HK$7.57 per SOL Share for the last fifteen (15) dealing dates up to and including 16th July, 2007.

The Purchase Price and the Maximum Purchase Price were determined based on arm’s length negotiation between the parties with reference to the prevailing market price of the SOL Shares on the Stock Exchange.

REASONS FOR THE DISPOSAL OF THE SALE SHARES

The Directors believe that the principal reasons for selling the Sale Shares are:

• to rebalance the Group’s investment portfolio, which is presently somewhat concentrated in SOL Shares;

• to realise some of the large profits made by the Group from its investment in SOL and to take advantage of the terms of the Agreement, which avoids placing shares to third parties at a discount in the market upon signing a sale and purchase or placing agreement whilst guaranteeing a fixed minimum price upon completion irrespective of market falls and the benefit of selling at the Current Market Price should the price of SOL Shares rise, subject to SOICL’s right to terminate the agreement if the Maximum Purchase Price is exceeded;

• retain a substantial shareholding should prices rise further; and

• to reliquify the Group’s balance sheet, reduce gearing and make available gearing capacity for new activities or investment in existing ones.

— 24 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL TERMS OF THE AGREEMENT

Set out below are the principal terms of the Agreement.

The Agreement is a conditional sale and purchase agreement under which conditionally New Rainbow agrees to sell and SOICL agrees to purchase the Sale Shares.

The Purchase Price is set on the Determination Date and is the higher of the Minimum Purchase Price of HK$7.87 per Sale Share and the Current Market Price. However, if the Current Market Price exceeds the Maximum Purchase Price of HK$8.50 per Sale Share then SOICL has the right but not the obligation to terminate the Agreement.

There are three conditions, all of which must be satisfied by the Long Stop Date of 22nd August, 2007 or such other date as the parties may agree. The conditions are:

• the Company obtaining the consent of the Joint Global Coordinators to the disposal of the Sale Shares by New Rainbow to SOICL. This condition has been satisfied.

• the approval of Independent Shareholders at the SGM for the execution of the Agreement and the sale of the Sale Shares to SOICL thereby; and

• where applicable, a waiver having been obtained from the Securities and Futures Commission from SOICL having to make a general offer to all Shareholders of SOL pursuant to Rule 26 of the Hong Kong Code on Takeovers and Mergers (the “Code”) in respect of the transactions contemplated under the Agreement. The Directors have confirmed that SOICL has no obligation under Rule 26 of the Code to make a general offer to all shareholders of SOL as a result of the transaction contemplated under the Agreement.

Completion of the Agreement is to take place within three business days of the conditions having been satisfied unless the parties agree otherwise and the consideration of up to approximately HK$1,800 million will be paid at completion to the Company for the Sale Shares which will then be acquired by SOICL.

We consider the basis of determining the consideration for the Sale Shares and the payment and other terms of the Agreement to be on normal commercial terms, and to be fair and reasonable and in the interests of the Company and Independent Shareholders.

FINANCIAL EFFECTS ON THE GROUP

1. Net assets

The carrying value of SOL Shares in the books of account of the Group as at 31st December, 2006 was HK$6.79 per SOL Share. Accordingly, the disposal of the Sale Shares will give rise to an additional capital gain in the books of account of the Group of about HK$247 million in the event that the disposal is made at the Minimum Purchase Price and about HK$362 million in the event that the disposal is made at the Maximum Purchase Price. A total of 228.7 million SOL Shares will be sold at

— 25 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

the Minimum Purchase Price and 211.8 million at the Maximum Purchase Price. The exact gain and number of SOL Shares to be sold will be capable of being calculated only on the Determination Date. The consolidated net asset value of the Group will be increased by the amount of the gain over and above that already realised in the books of account of the Group as at 31st December, 2006. The Group’s residual interest in SOL will fall to 12.38 or 12.78 per cent respectively if the Purchase Price is fixed at the Minimum Purchase Price and Maximum Purchase Price.

It is important to note that the Minimum Purchase Price in the Agreement and selling at the Current Market Price thereunder safeguards the Company from placing the Sale Shares at any discount to the market price on the day on which the sale was agreed as is normally the case (see table 1 above) and may indeed provide a benefit which would not otherwise have occurred should the price of SOL Shares rise between signing and Completion.

Notwithstanding the foregoing, there are circumstances in which volume in the trading of SOL Shares or volatility in the price of SOL Shares could result in a Purchase Price for the Sale Shares set at the Determination Date which would be below the market price as at Completion by virtue of the Purchase Price having been calculated with reference to a volume weighted average daily market pricing formula. In the event of a significant increase in the trading price of SOL Shares, the market price at Completion would be likely to be above the Maximum Purchase Price.

Thus, in the event that the market price of SOL Shares were to be at Completion significantly above the Current Market Price, calculated by reference to the volume weighted average formula, this would be an incentive for SOICL to proceed and acquire the Sale Shares since the Purchase Price would then be standing at a discount to the market price.

However, whatever the outcome Independent Shareholders and the Company will be in a more favourable position than if the Sale Shares had been sold through the market at a discount when the sale was agreed as is normally the case.

2. Earnings

The gain referred to above will be reflected in the consolidated profit and loss account of the Group for the year ending 31st December, 2007. Any further impact on the earnings of the Group will depend upon the use of the proceeds of the disposal of the Sale Shares and the future performance of SOL which cannot be determined now. If loans are repaid, the costs of borrowing will fall accordingly until loans are redrawn.

3. Liquidity

The liquidity of the Group will be markedly increased by the disposal of the Sale Shares which will result in an infusion of approximately HK$1,800 million in cash. This infusion will free up gearing capacity and, or, provide funds for new investments.

4. Use of proceeds from the disposal of the Sale Shares

Net proceeds from the disposal of the Sale Shares will be used as working capital for general corporate purposes and to repay existing debts.

— 26 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

5. Gearing

The gearing of the Group may be reduced by up to approximately HK$1,800 million from the proceeds of the disposal of the Sale Shares pending new investments being made. The disposal of the Sale Shares will have a marked impact on the Group’s consolidated balance sheet and free up considerable gearing capacity for future investments.

RISK FACTORS

Independent Shareholders should take note that the Agreement is conditional and the conditions set out above must be satisfied or the disposal of the Sale Shares will not take place.

Furthermore, if the Purchase Price of SOL Shares were to rise above the Maximum Purchase Price, SOICL has the right but not the obligation to terminate the Agreement in which case no disposal of the Sale Shares will take place.

RECOMMENDATION

Having considered the principal factors and reasons for the disposal of the Sale Shares which are set out above, we consider that the Agreement is made on normal commercial terms, in the ordinary and usual course of business and is fair and reasonable and in the interests of, the Independent Shareholders and Shareholders as a whole. Accordingly, we recommend that Independent Shareholders vote in favour of the ordinary resolution to be proposed at the SGM to approve the Agreement and that the Independent Board Committee advises the Independent Shareholders accordingly.

Yours faithfully, for and on behalf of Anglo Chinese Corporate Finance, Limited Christopher J. Howe Managing Director

— 27 —

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts not contained in this circular, the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

(A) Interests of Directors and chief executive

At the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (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 were taken or deemed to have been taken under such provisions of the SFO) or the Model Code for Securities Transactions by Directors of Listed Issuers or which were required to be entered in the register required to be kept under section 352 of the SFO were as follows:

(a) Long position in the shares of the Company

	Number of ordinary	Number of ordinary	Approximate
	shares in the Company		percentage of
	Personal	Other	shareholding in
Name of Director	interests	interests	the Company
Lo Hong Sui, Vincent	—	185,895,000	60.70%
		(Note)
Wong Yuet Leung, Frankie	800,000	—	0.26%
Choi Yuk Keung, Lawrence	1,840,000	—	0.60%
Lowe Hoh Wai Wan, Vivien	520,000	—	0.17%

Note: These shares comprise 181,871,000 shares beneficially owned by SOCL and 4,024,000 shares and underlying shares deemed to be interested by SOCL under sections 317 and 318 of the SFO.

— 28 —

GENERAL INFORMATION

APPENDIX

Among 181,871,000 shares beneficially owned by SOCL, 166,148,000 shares and 15,723,000 shares were held respectively by SOCL and Shui On Finance Company Limited, which is an indirect wholly-owned subsidiary of SOCL. SOCL is owned by the Bosrich Unit Trust, the trustee of which is Bosrich Holdings Inc. 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 and HSBC International Trustee Limited is the trustee. Accordingly, Mr. Lo Hong Sui, Vincent, HSBC International Trustee Limited and Bosrich Holdings Inc. are deemed to be interested in such shares under the SFO.

On 27 August 2002, SOCL granted call options over certain existing shares of the Company beneficially owned by SOCL to each of Mr. Wong Ying Wai, Wilfred (“Mr. Wilfred Wong”), Mr. Wong Hak Wood, Louis (“Mr. Louis Wong”) and Mr. Wong Yuet Leung, Frankie as part of the incentive reward for their services to the Company. A maximum of 50% of the shares transferred or to be transferred upon exercise of call options shall be subject to a restriction of disposal within 12 months from the date such shares are transferred. Mr. Wilfred Wong and Mr. Louis Wong had exercised all their call options and accordingly are deemed to be parties to an agreement to acquire shares under sections 317 and 318 of the SFO. As such, SOCL is deemed to be interested in the shares and underlying shares owned by Mr. Wilfred Wong and Mr. Louis Wong.

• (b) Short position in the shares of the Company

			Approximate
			percentage of
	Number of ordinary		shareholding in
	shares in the Company		the Company
	Personal	Other
Name of Director	interests	interests
Lo Hong Sui, Vincent	—	1,600,000	0.52%
		(Note)

Note: These shares represent the outstanding balance of the call options granted by SOCL under the call option arrangement mentioned in the note to item (a) above.

— 29 —

GENERAL INFORMATION

APPENDIX

(c) Share options of the Company

At the Latest Practicable Date, the following Directors had interests in the share options granted by the Company under the share option scheme adopted by the Company on 27 August 2002:

			Period during	Number of
	Subscription		which options	ordinary shares
		price per	outstanding	subject to the
Name of Director	Date of grant	share	are exercisable	options
		HK$
Choi Yuk Keung,	3-1-2007	16.78	3-1-2010 to	700,000
Lawrence			2-1-2017
	14-6-2007	20.96	14-12-2007 to	250,000
			13-6-2012
Wong Yuet Leung,	1-8-2006	14.00	1-2-2007 to	2,000,000
Frankie			31-7-2011
	3-1-2007	16.78	3-1-2010 to	1,500,000
			2-1-2017
	14-6-2007	20.96	14-12-2007 to	500,000
			13-6-2012
Lowe Hoh Wai	27-8-2002	6.00	27-8-2005 to	300,000
Wan, Vivien			26-8-2010
	1-8-2006	14.00	1-2-2007 to	120,000
			31-7-2011
	3-1-2007	16.78	3-1-2010 to	625,000
			2-1-2017
	14-6-2007	20.96	14-12-2007 to	176,000
			13-6-2012

— 30 —

GENERAL INFORMATION

APPENDIX

(d) Call option over the shares of the Company

At the Latest Practicable Date, the following Director had a call option granted by SOCL over the shares of the Company pursuant to the arrangement mentioned in the note to item (a) above:

				Number of
				ordinary shares
				subject to the
**Name **	of Director	Exercise price	Exercise period	call option
Wong	Yuet Leung, Frankie	HK$6.00	27-8-2005 to	1,600,000
			26-8-2010

(e) Long position in the shares of SOL

	**Number **	of ordinary	Approximate
	shares in SOL		percentage of
	Personal	Other	shareholding
Name of Director	interests	interests	in SOL
Lo Hong Sui, Vincent	—	2,479,281,870	59.23%
		(Note)

Note: These shares comprise 2,250,565,225 shares of SOL owned by Shui On Group before the Disposal and 228,716,645 shares of SOL (based on the Minimum Purchase Price of HK$7.87 per SOL Share and subject to adjustment based on the Purchase Price as finally determined) to be transferred from New Rainbow to SOICL upon Completion. The 2,250,565,225 shares of SOL are directly held by subsidiaries of SOCL, namely SOICL, Shui On Properties Limited, Shui On Finance Company Limited and New Rainbow. SOCL is owned by the Bosrich Unit Trust, the trustee of which is Bosrich Holdings Inc. 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 and HSBC International Trustee Limited is the trustee. Accordingly, Mr. Lo Hong Sui, Vincent is deemed to be interested in such shares under the SFO. Upon Completion, the transfer of the relevant shares in SOL from New Rainbow to SOICL will be reported in accordance with the requirements under Part XV of the SFO, and the deemed interest of Mr. Lo Hong Sui, Vincent in SOL will then be reduced back to 2,250,565,225 shares.

Save as disclosed above, at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (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 were taken or deemed to have been taken under such provisions of the SFO) or the Model Code for Securities Transactions by Directors of Listed Issuers or which were required to be entered in the register required to be kept under section 352 of the SFO.

There is no contract or arrangement subsisting at the Latest Practicable Date in which any of the Directors is materially interested and which is significant in relation to the business of the Group.

— 31 —

GENERAL INFORMATION

APPENDIX

None of the Directors has had any direct or indirect interest in any assets which have since 31 December 2006 (being the date to which the latest published audited consolidated financial statements of the Company were made up) been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

(B) Interests of shareholders discloseable pursuant to the SFO

Save as disclosed below and under the section “Interests of Directors and chief executive” above, 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, 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:

Long position in the shares of the Company

				Approximate
			Number of	percentage of
Name of	Class of		ordinary	shareholding in
shareholders	shares	Capacity	shares held	the Company
Louis Wong	Ordinary	Beneficial owner/	185,895,000	60.70%
		interests of party to	(Note i)
		an agreement to
		acquire shares under
		sections 317 and
		318 of the SFO
Wilfred Wong	Ordinary	Interest of controlled	185,895,000	60.70%
		corporation/interests	(Note i)
		of party to an
		agreement to acquire
		shares under
		sections 317 and
		318 of the SFO
Cheah Cheng Hye	Ordinary	Interest of	14,238,000	4.65%
		controlled	(Note ii)
		corporation
Value Partners	Ordinary	Investment manager	14,238,000	4.65%
Limited			(Note ii)
John Zwaanstra	Ordinary	Interest of	24,665,247	8.05%
		controlled
		corporation
Penta Investment	Ordinary	Investment manager	24,665,247	8.05%
Advisers Limited

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GENERAL INFORMATION

APPENDIX

Notes:

• (i) These shares include the aggregate interests of SOCL deemed under sections 317 and 318 of the SFO as mentioned in the note to item (a) under “Interests of Directors and chief executive” above.

• (ii) These shares are held by Value Partners Limited which is controlled by Mr. Cheah Cheng Hye.

(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, at the Latest Practicable Date, was directly or indirectly interested in 10% 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:

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||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|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%|
|(Guangzhou|Panyu|Guanglu|Industrial|Aluminum|Engineering|Co.|
|Co.,|Ltd.)|Ltd.|
|Eversound|Enterprise|Limited|Panyu|Dynamic|Mark|Steel|&|16%|
|Aluminum|Engineering|Co.|
|Ltd.|
|Metro|Materials|Engineering|Company|Lamma|Concrete|Products|40%|
|Limited|Limited|
|Metro|Materials|Engineering|Company|Guangdong|Lamma|Concrete|40%|
|Limited|Products|Limited|
|Panyu|Shui|Fai|Metal|Works|22.5%|
|(Guangzhou|Panyu|Guanglu|Industrial|Engineering|Company|Limited|
|Co.,|Ltd.)|
|Hip|Kwan|Engineering|Company|Panyu|Shui|Fai|Metal|Works|22.5%|
|Limited|Engineering|Company|Limited|
|Eversound|Enterprise|Limited|Dynamic|Mark|Limited|20%|
|Hip|Kwan|Engineering|Company|Shui|Fai|Metal|Works|22.5%|
|Limited|Engineering|Company|Limited|
|Eversound|Enterprise|Limited|Shui|Fai|Metal|Works|22.5%|
|Engineering|Company|Limited|
|Ecomat|(Hong|Kong)|Limited|Pacific|Extend|Limited|18%*|
|Win|Media|Limited|Pacific|Extend|Limited|10%|[#]|

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GENERAL INFORMATION

APPENDIX

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||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|Effective|
|Name|of|owner|of|shares|or|equity|%|equity|
|interest|(as|the|case|may|be)|Name|of|subsidiary|interest|held|
|15%|
|(Shanghai|Shui|On|
|Construction|Co.,|Ltd.)|
|(SIG|15%|
|Investment|Management|Co.,|Ltd.)|(Shanghai|Shui|On|
|Construction|Co.,|Ltd.)|
|20%|
|(Chongqing|T.H.|Desheng|
|Engineering|Co.|Ltd.)|
|20%|
|(Chongqing|T.H.|Desheng|
|Engineering|Co.|Ltd.)|
|Chongqing|T.H.|White|Cement|40%|
|Co.|Ltd.|
|45%|

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• The 18% equity interest held by Ecomat (Hong Kong) Limited carries voting right of 11.25%.

• The 10% equity interest held by Win Media Limited carries voting right of 6.25%.

3. EXPERT

• (a) The following is the qualification of the expert who has given its opinion or advice which is contained in this circular:

Name Qualification Anglo Chinese A corporation licensed under the SFO to conduct Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

• (b) Anglo Chinese 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.

• (c) At the Latest Practicable Date, Anglo Chinese does not have 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.

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GENERAL INFORMATION

APPENDIX

• (d) At the Latest Practicable Date, Anglo Chinese does not have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2006, the date to which the latest published audited consolidated financial statements of the Company were made up.

4. SERVICE CONTRACTS

At the Latest Practicable Date, no Director had a service contract with any member of the Group which is not expiring or determinable by the Company within one year without the payment of compensation other than statutory compensation.

5. LITIGATION

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. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2006, the date to which the latest published audited consolidated financial statements of the Company have been made up.

7. COMPETING BUSINESS INTERESTS OF DIRECTORS

At the Latest Practicable Date, none of the Directors and their respective associates has 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.

8. GENERAL

• (a) The qualified accountant of the Company is Mr. Li Chi Keung, Evans, a Fellow of The Association of Chartered Certified Accountants and an Associate of the Hong Kong Institute of Certified Public Accountants, The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Company Secretaries.

• (b) The secretary of the Company is Mr. Sincere Wong, a qualified lawyer in the jurisdictions of Hong Kong, England and Wales.

• (c) The principal share registrar and the transfer office of the Company is the Bank of Bermuda Limited, 6 Front Street, Hamilton HM 11, Bermuda.

• (d) The Hong Kong branch share registrar and transfer office of the Company is Standard Registrars Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.

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GENERAL INFORMATION

APPENDIX

• (e) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The head office and principal place of business of the Company is at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong.

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

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during business hours at the head office of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong from the date of this circular up to and including 17 August 2007:

• (a) the Agreement;

• (b) the “Letter from the Independent Board Committee” as set out in this circular;

• (c) the “Letter from the Independent Financial Adviser” as set out in this circular; and

• (d) the letter of consent from Anglo Chinese referred to in paragraph 3 of this Appendix.

— 36 —

NOTICE OF SPECIAL GENERAL MEETING

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(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting of the shareholders of Shui On Construction and Materials Limited (the “ Company ”) will be held at Room 103, 1st Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong on Friday, 17 August 2007 at 3:00 p.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT

• (a) the Agreement (as defined in the circular to shareholders of the Company dated 31 July 2007 and a copy of which has been produced to this meeting marked “A” and signed by the chairman of this meeting for the purpose of identification), and the transaction contemplated thereunder be and is hereby approved, confirmed and ratified; and

• (b) the directors of the Company (“ Director(s) ”) be and are hereby authorised to do all such further acts and things and execute such further documents and take all steps which in their opinion may be necessary, desirable or expedient to implement and/or give effect to the Agreement and all other transactions of the Company which arise following completion of the Agreement and all other transactions contemplated thereunder with any changes as such Directors may consider necessary, desirable or expedient.”

By Order of the Board Sincere Wong Company Secretary

Hong Kong, 31 July 2007.

* for identification purpose only

— 37 —

NOTICE OF SPECIAL GENERAL MEETING

Notes :

• (1) Any member entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and, on a poll, vote in his stead. A proxy need not be a member of the Company.

• (2) To be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a certified copy thereof, must be lodged with the head office of the Company at 34th Floor, Shui On Centre, 6-8 Harbour Road, Hong Kong not less than 48 hours before the time fixed for holding the meeting.

At the date of this notice, the executive directors of the Company are Mr. Lo Hong Sui, Vincent (Chairman), Mr. Choi Yuk Keung, Lawrence (Vice-chairman), Mr. Wong Yuet Leung, Frankie (Chief Executive Officer) and Mrs. Lowe Hoh Wai Wan, Vivien; the non-executive director of the Company is Professor Michael John Enright; and the independent non-executive directors of the Company are Mr. Anthony Griffiths and Mr. Cheng Mo Chi, Moses.

— 38 —