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 (the “Company”), 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

FORMATION OF A JOINT VENTURE FOR THE DEVELOPMENT OF DALIAN SOFTWARE PARK PHASE II

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

A letter from the Independent Board Committee is set out on pages 20 and 21 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 22 to 36 of this circular.

A notice convening the Special General Meeting to be held at Room 103, 1st Floor, Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong on Wednesday, 20 June 2007 at 5:30 p.m. is set out on pages 47 and 48 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, Wanchai, Hong Kong as soon as possible and, in any event, not later than 48 hours before the time appointed for the holding of the 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 adjournment thereof (as the case may be) should you so wish.

* for identification purpose only

4 June 2007

Pages	Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
Appendix — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	47

— i —

DEFINITIONS

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

“Anglo Chinese”	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;
“Asset Transfer and	the agreement between the PRC Project Companies and
Compensation Agreement”	Dalian Development in relation to the Dalian Project;
“Assign Land”	the 7 plots of land at Dalian Software Park Phase II, which
	require substantial preparation works to be carried out and in
	respect of which relocation agreements have not been reached
	with most of the occupiers;
“associate”, “connected	each has the meaning ascribed to it in the Listing Rules;
person(s)”, “substantial
shareholder(s)”
“Board”	the board of Directors;
“Company” or “SOCAM”	Shui On Construction and Materials Limited, a company
	incorporated in Bermuda whose shares are listed on the Stock
	Exchange (Stock Code: 983);
“Consideration”	the consideration of RMB2,000 million for the Dalian Project,
	payable by the PRC Project Companies to Dalian
	Development under the Asset Transfer and Compensation
	Agreement;
“Dalian Development”	Dalian Software Park Development Company Limited, a
	limited liability company incorporated in the PRC and which
	is a member of Yida Group;
“Dalian Group”	the Dalian Offshore Group together with the Dalian Onshore
	Group;
“Dalian Offshore Group”	Dalian Offshore JV together with its subsidiaries including
	SPV;
“Dalian Offshore JV”	Richcoast Group Limited, a company incorporated in the
	British Virgin Islands and the joint venture company to be
	established under the Joint Venture Agreement;
“Dalian Onshore Group”	collectively the PRC JV Companies and the PRC Project
	Companies;

— 1 —

DEFINITIONS

“Dalian Project” the development and operation of Dalian Software Park Phase II in Dalian, the PRC; “Dalian Software Park Phase II” the piece of land situated at Hekou Bay, Si Tiao Gou Cha and both sides of Huang Ni Chuan Lushun South Road, Nan Hai Tou, the PRC for mixed use development principally intended for the information technology and business process outsourcing industry; “Directors” the directors of the Company; “DTZ” DTZ Debenham Tie Leung Limited; “Entrustment Agreement” the entrustment agreement between the PRC Project Companies and Dalian Development in relation to further clearance works on such portion of the Land constituting the Assign Land; “Equity Interest Transfer collectively the four equity interest transfer agreements Agreements” between each SPV and Yida Group in relation to the sale and purchase of 78% equity interest in the PRC JV Companies; “Fixed Fee Land” the 16 plots of land at Dalian Software Park Phase II, on which clearance works have been substantially completed. Parts of the Fixed Fee Land will require land reclamation works and Dalian Development has obtained sea use rights for such parts; and for other parts, relocation agreements have been reached with most of the occupiers. Two plots of land (namely the Specified Plots) are ready for development and Dalian Development has already obtained land use certificates for these sites; “Group” the Company and its subsidiaries; “HK$” Hong Kong dollars, the lawful currency of Hong Kong; “Hong Kong” the Hong Kong Special Administrative Region of the PRC; “Independent Board Committee” the committee of the Board comprising Mr. Cheng Mo Chi, Moses and Professor K.C. Chan, each being independent non-executive Directors, formed to advise the Shareholders on whether the terms and conditions of the Transaction Agreements 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 transactions contemplated under the Transaction Agreements;

— 2 —

DEFINITIONS

“Independent Shareholders”	the Shareholders, other than Mr. Lo and his associates;
“Independent SOL Shareholders”	SOL Shareholders, other than Mr. Lo and his associates
	(including and without limitation to SOCAM);
“Innovate Zone”	Innovate Zone Group Limited, an indirect wholly-owned
	subsidiary of SOL and a company incorporated in the British
	Virgin Islands;
“Joint Venture Agreement”	the shareholders agreement between Innovate Zone, Main
	Zone and Many Gain dated 25 May 2007 in relation to the
	establishment of Dalian Offshore JV as joint venture
	company;
“Land”	the 23 plots of land at Dalian Software Park Phase II, which
	comprise the Fixed Fee Land and the Assign Land, with a total
	area of approximately 6,982,000 square metres;
“Latest Practicable Date”	30 May 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;
“Main Zone”	Main Zone Group Limited, a direct wholly-owned subsidiary
	of SOCAM and a company incorporated in the British Virgin
	Islands;
“Many Gain”	Many Gain International Limited, a member of Yida Group
	and a company incorporated in the British Virgin Islands;
“Mr. Lo”	Mr. Lo Hong Sui, Vincent;
“Onshore Shareholders	collectively the four shareholders agreements between Yida
Agreements”	Group and each SPV in relation to the management of the
	PRC JV Companies;
“PRC”	the People’s Republic of China, and for the purpose of this
	circular, excluding Hong Kong, the Macau Special
	Administrative Region and Taiwan;
“PRC JV Companies”	4 companies to be established as wholly-owned subsidiaries
	by Yida Group in the PRC and which will form part of the
	Dalian Onshore Group;
“PRC Project Companies”	companies to be established by the PRC JV Companies as
	wholly-owned subsidiaries and which will form part of the
	Dalian Onshore Group;

— 3 —

	DEFINITIONS
“Resolution”	the ordinary resolution to be proposed at the Special General
	Meeting 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;
“Service Agreement”	the service agreement between the PRC Project Companies
	and Dalian Development in relation to the continuation of
	clearance works on such portion of the Land constituting the
	Fixed Fee Land;
“SFO”	the Securities and Futures Ordinance (Chapter 571	of the
	Laws of Hong Kong);
“Shareholders”	holders of the Shares;
“Shares”	ordinary shares of nominal value HK$1.00 each in the	capital
	of SOCAM;
“SOL”	Shui On Land Limited, a company incorporated	in the
	Cayman Islands whose shares are listed on the	Stock
	Exchange (Stock Code: 272);
“SOL Shareholders”	holders of SOL Shares;
“SOL Shares”	ordinary shares of nominal value US$0.0025 each	in the
	capital of SOL;
“Special General Meeting”	the special general meeting of the Company to be held on 20
	June 2007 at 5:30 p.m., notice of which is set out on pages 47
	and 48 of this circular, or any adjournment thereof;
“Specified Plots”	two plots of the Land (namely plot numbers W1-A and W2-A
	in the Fixed Fee Land) of approximately 1,263,797	square
	metres, on which all preparation works have been carried out
	and the titles of which will be transferred to the PRC	Project
	Companies pursuant to the Asset Transfer and Compensation
	Agreement;
“SPV”	4 companies to be established by Dalian Offshore	JV as
	wholly-owned subsidiaries to form part of the	Dalian
	Offshore Group;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“subsidiary”	has the meaning ascribed to it in the Listing Rules;

— 4 —

	DEFINITIONS
“Transaction Agreements”	collectively the Joint Venture Agreement, the Equity Interest
	Transfer Agreements, the Onshore Shareholders Agreements,
	the Asset Transfer and Compensation Agreement, the Service
	Agreement and the Entrustment Agreement;
“US$”	United States dollars, the lawful currency of the United States
	of America;
“Yida Group”	Yida Group Company Limited, a limited liability company
	incorporated in the PRC, and its subsidiaries (including Many
	Gain and Dalian Development); and
“%”	per cent.

— 5 —

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) Mr. Wong Fook Lam, Raymond

Registered Office:

Clarendon House 2 Church Street Hamilton HM11 Bermuda

Mrs. Lowe Hoh Wai Wan, Vivien

Non-executive Director:

Professor Michael John Enright

Independent Non-executive Directors:

Mr. Anthony Griffiths Mr. Cheng Mo Chi, Moses Professor K.C. Chan

Principal place of business in Hong Kong:

34th Floor Shui On Centre 6-8 Harbour Road Wanchai Hong Kong

4 June 2007

To the Shareholders

Dear Sir or Madam,

CONNECTED AND DISCLOSEABLE TRANSACTION

FORMATION OF A JOINT VENTURE FOR THE DEVELOPMENT OF DALIAN SOFTWARE PARK PHASE II

INTRODUCTION

The Board is pleased to announce that on 25 May 2007, Main Zone has entered into a joint venture agreement with Innovate Zone and Many Gain whereby the parties agreed to form a joint venture company, Dalian Offshore JV under the name of Richcoast Group Limited, which will be owned as to 61.54%, 28.20% and 10.26% by Innovate Zone, Main Zone and Many Gain respectively. Dalian Offshore JV will in turn establish a chain of subsidiaries forming the Dalian Offshore Group to acquire from Yida Group a 78% equity interest in each of the four PRC JV Companies to be formed by Yida Group. The PRC JV Companies will hold the PRC Project Companies which will be used to acquire the Land and undertake the development of the Dalian Project.

* for identification purpose only

— 6 —

LETTER FROM THE BOARD

1. JOINT VENTURE AGREEMENT

Date: 25 May 2007

Parties:

(1) Innovate Zone;
(2) Main Zone; and
(3) Many Gain.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, Many Gain and its ultimate beneficial shareholders, are third parties independent of the Company.

Subject:

To form Dalian Offshore JV which will be owned as to 61.54%, 28.20% and 10.26% by Innovate Zone, Main Zone and Many Gain, respectively. Dalian Offshore JV will in turn establish a chain of subsidiaries forming the Dalian Offshore Group to acquire from Yida Group a 78% equity interest in each of the four PRC JV Companies to be formed by Yida Group. The PRC JV Companies will hold the entire registered capital of the two PRC Project Companies, together forming the Dalian Onshore Group, which will acquire the Land and undertake the development of the Dalian Project. Pursuant to and subject to the satisfaction of the conditions of the Joint Venture Agreement, various agreements will be signed by the respective parties for the acquisition of the Dalian Onshore Group and Dalian Development’s interests in respect of the Land and for engaging Dalian Development to undertake the clearance and preparation works for the Land, including the Equity Interest Transfer Agreements, the Onshore Shareholders Agreements, the Asset Transfer and Compensation Agreement, the Service Agreement and the Entrustment Agreement. These agreements will be signed after the establishment of the PRC Project Companies and prior to the submission of the application documents required for the equity transfer under the Equity Interest Transfer Agreements. Details of these agreements which will form part of the Transaction Agreements, and details of the Dalian Project are set out in the sections headed “Other Transaction Agreements” and “Further Details of the Dalian Project” respectively below.

Shareholding and subscription monies:

Each of Innovate Zone, Main Zone and Many Gain shall contribute to the equity capital of Dalian Offshore JV in cash in the following amount on or before the third business day after obtaining the relevant government approvals and completing all procedures required for the establishment of the Dalian Onshore Group:

(1) Innovate Zone — 61.54% (US$480)

— 7 —

LETTER FROM THE BOARD

(2) Main Zone — 28.20% (US$220)
(3) Many Gain — 10.26% (US$80)

Conditions:

The Joint Venture Agreement is conditional upon obtaining approvals of the Transaction Agreements and all transactions contemplated under the Transaction Agreements from the Independent Shareholders and the Independent SOL Shareholders.

Board representation and control:

The board shall have 10 directors. Innovate Zone will have the right to nominate 4 directors to the board of Dalian Offshore JV and each of Main Zone and Many Gain will have the right to nominate 3 directors.

As Main Zone does not control the majority of the board composition of Dalian Offshore JV, the investment in Dalian Offshore JV will be accounted for under the equity method of accounting by the Group.

Loan:

Each of Innovate Zone, Main Zone and Many Gain shall provide the following loans to subsidiaries in the Dalian Group to fund the acquisition under the Equity Interest Transfer Agreements and the consideration payable under the Asset Transfer and Compensation Agreement for the purposes of the Dalian Project:

	Shareholding	Loan
		(HK$ million)
Innovate Zone	61.54%	1,107.69
Main Zone	28.20%	507.69
Many Gain	10.26%	184.62
Total	100.00%	1,800.00

The loans will be made available in cash by Innovate Zone and Main Zone within 3 business days after completing the setting up of the Dalian Onshore Group upon the satisfaction of certain conditions set out in the Joint Venture Agreement, including the execution of the Transaction Agreements. Many Gain will contribute its share of the loan with the dividend receivable from Dalian Offshore JV. These loans will be unsecured, repayable on demand, and will be interest-free until after Many Gain has made its shareholder’s loan contribution to Dalian Offshore JV and thereafter bear interest at the rate of 5% per annum.

— 8 —

LETTER FROM THE BOARD

Main Zone’s capital and loan commitment will be funded by its own resources and unutilised banking facilities.

In the event that any third party funding is required for the development of the Dalian Project, SOL, SOCAM and Yida Group shall, if required by the lender, provide guarantee for such fund severally up to a maximum aggregate amount of RMB500 million in the ratio of 48:22:30.

Non-Competition:

Innovate Zone, Main Zone and Many Gain agree not to and cause their affiliates not to, engage in any competing business (i.e. any development or leasing of office buildings for use by the software industry, except the related land development work before the land use rights are granted) in Dalian city for a period of 3 years after completing the setting up of the Dalian Onshore Group, unless with the prior consent of the other parties.

After such 3-year period, if any one of the parties or its affiliates:

(1) intends to engage in such competing business, it shall first offer the business opportunity to the PRC JV Companies to participate on a 50:50 basis; or
(2) is offered an opportunity to co-invest in any competing business by a third party, it may not participate in such co-investment except with the PRC JV Companies on a 50:50 basis.

2. OTHER TRANSACTION AGREEMENTS

A. EQUITY INTEREST TRANSFER AGREEMENTS (comprising 4 equity interest transfer agreements in total)

Parties:

(1) Yida Group as the Vendor; and
(2) respective SPV as the Purchaser.

Assets involved:

Each SPV will purchase and Yida Group will sell as legal and beneficial owner of a 78% equity interest in each of the four PRC JV Companies, which will hold the interests in the respective PRC Project Companies.

Upon completion of the Equity Interest Transfer Agreements, Yida Group will hold as legal and beneficial owner the remaining 22% equity interest in each of the four PRC JV Companies.

— 9 —

LETTER FROM THE BOARD

Consideration:

The aggregate consideration under the Equity Interest Transfer Agreements of RMB936 million represents 78% of the total registered capital of the PRC JV Companies to be contributed by Yida Group in the sum of RMB1,200 million. Such consideration will be paid in cash into accounts jointly controlled by SPV and Yida Group within 15 business days after the completion of the equity transfer under the Equity Interest Transfer Agreements. The funds in such accounts will be released in stages to Yida Group when the existing mortgage on the Specified Plots has been released and when the titles of the Specified Plots are transferred to the PRC Project Companies.

Source of funding:

The consideration will be funded by the loans provided by Innovate Zone and Main Zone under the Joint Venture Agreement.

Conditions to completion:

Completion of the Equity Interest Transfer Agreements is conditional upon, among other things:

(i) obtaining the relevant PRC government approvals in respect of the transfer of the 78% interests to SPV and the change of the PRC JV Companies from PRC domestic enterprises to sino-foreign joint venture companies;
(ii) obtaining government approvals and completing all procedures required for the setting up of the PRC Project Companies and the PRC JV Companies; and
(iii) execution of the Asset Transfer and Compensation Agreement, the Service Agreement and the Entrustment Agreement.

Completion:

Completion of the Equity Interest Transfer Agreements will take place after the conditions have been satisfied.

— 10 —

LETTER FROM THE BOARD

B. ONSHORE SHAREHOLDERS AGREEMENTS ON PRC JV COMPANIES (comprising 4 onshore shareholders agreements in total)

Parties:

(1) Yida Group; and
(2) respective SPV.

Subject:

To govern the relationship between Yida Group and each SPV in the management of the respective PRC JV Companies.

Shareholding:

The respective SPV and Yida Group shall hold 78% and 22% in the equity of each of the PRC JV Companies respectively.

Board representation and control:

The respective SPV and Yida Group will have the right to nominate 5 directors (of which Innovate Zone has the right to nominate 3 directors and Main Zone has the right to nominate 2 directors) and 2 directors to the board of each PRC JV Company respectively.

Future funding:

SPV and Yida Group shall contribute to additional funding needs of the Dalian Project in the amount of approximately RMB639 million and RMB231 million respectively which is substantially in proportion to their existing equity interest in the PRC JV Companies by way of direct loan at an interest of 10% per annum or by arranging entrustment loan for the Dalian Project. In the event any additional bank financing is sought for, any guarantee to be provided will comply with the requirements under the Joint Venture Agreement, namely, SOL, SOCAM and Yida Group will provide such guarantee in the rates of 48:22:30 up to a maximum aggregate amount of RMB500 million.

It is expected that these additional RMB639 million and RMB231 million funding will be made within six months of the signing of the Onshore Shareholders Agreements. The Directors expect the PRC Project Companies to meet their own funding needs in relation to the Dalian Project. Save for the funding and guarantee set out in the Joint Venture Agreement and the Onshore Shareholders Agreements, the Directors believe that no further funding or financial assistance will be required from the Company in relation to the Dalian Project.

— 11 —

LETTER FROM THE BOARD

C. ASSET TRANSFER AND COMPENSATION AGREEMENT

Parties:

(1) PRC Project Companies; and
(2) Dalian Development.

Subject:

(i) the PRC Project Companies will compensate Dalian Development in respect of the clearance and land preparation works that Dalian Development has already conducted on the Land;
(ii) Dalian Development will transfer the Specified Plots, which form part of the Land, to the PRC Project Companies, and the PRC Project Companies will reimburse Dalian Development for the land grant fee paid to the relevant PRC government authorities in the sum of approximately RMB140 million;
(iii) Dalian Development will assist the Dalian Onshore Group in obtaining the remaining Land and will pay to the PRC Project Companies any compensation in respect of the clearance and land preparation works that it may receive from the PRC government authorities for any part of the Land granted to a third party; and
(iv) Dalian Development undertakes that neither Yida Group nor it will participate in the public tender, auction or listing-for-sale process of the Land, or obtain the right to develop the Land other than through the PRC Project Companies, unless with the prior consent of the PRC Project Companies.

Consideration:

The determination of the Consideration of RMB2,000 million for the asset transfer and compensation has been based on arm’s length negotiations with reference to (i) the valuation conducted by DTZ for the Specified Plots as at 21 May 2007 which amounted to approximately RMB735 million; and (ii) the costs that Dalian Development have already incurred in clearing and preparing the Land. The Consideration will be satisfied in the following manner:

(i) when the SPV has fulfilled its funding obligations of RMB639 million pursuant to the Onshore Shareholders Agreements, a series of cash payments totalling RMB1,820 million will be made in stages and paid into a designated account:
(a) an amount of RMB1,431 million will be used by Yida Group for repayment of their outstanding loans to the Dalian Onshore Group, and for payment of funding contribution to be made by Yida Group to the PRC JV Companies under the Onshore Shareholders Agreements in the amount of RMB231 million; and

— 12 —

LETTER FROM THE BOARD

(b) an amount of RMB389 million together with the reimbursement of approximately RMB140 million of land grant fee paid by Dalian Development will be released when the titles of the Specified Plots are transferred to the PRC Project Companies and Yida Group has fully utilised the RMB1,431 million in the manner above; and
(ii) the balance of the consideration in the amount of RMB180 million will be paid when Yida Group has paid up its share of the loan in the amount of HK$184.62 million to be contributed under the Joint Venture Agreement.

The consideration will be funded by the equity and loan contribution made by SOL, SOCAM and Yida Group to the Dalian Group under the Joint Venture Agreement and the Onshore Shareholders Agreements.

It is the intention of the Company that the Dalian Group will acquire all 23 plots of the Land. The acquisition of the Land (other than the Specified Plots which will be transferred to the PRC Project Companies) will be by way of competitive bidding and there is no assurance that the Dalian Group will be successful in acquiring all or any piece of the Land (other than the Specified Plots). As Dalian Development has already incurred costs in reclaiming, clearing and preparing the Land and has done so with the consent of the relevant government authorities in the PRC, in the event that any part of the Land is granted to a third party in the bidding process, it is reasonably believed that the PRC government will compensate Dalian Development for the relevant costs incurred, even though there is no written assurance from the PRC government to that effect. Such belief is consistent with past practices and to the reasonable knowledge of the Directors. Dalian Development has agreed to assign such rights to compensation to the PRC Project Companies in the event of that happening. According to the valuation conducted by DTZ, the valuation of the Specified Plots as at 21 May 2007 amounted to approximately RMB735 million. The Directors consider the terms of the Asset Transfer and Compensation Agreement to be fair and in the interest of the Group as a whole.

Expected date of completion of all clearance works on the Land:

It is estimated that the latest date for completion of the clearance works on the Land will be around 2010.

— 13 —

LETTER FROM THE BOARD

D. SERVICE AGREEMENT AND ENTRUSTMENT AGREEMENT

SERVICE AGREEMENT

Parties:

(1) PRC Project Companies; and
(2) Dalian Development.

Subject:

Dalian Development shall undertake the clearance and land preparation work for such portion of the Land of approximately 2,524,000 square metres constituting the Fixed Fee Land (including the Specified Plots). The Specified Plots are ready for development and will be transferred to the PRC Project Companies as set out in the Asset Transfer and Compensation Agreement. Substantial clearance and preparation work has been carried out on the remaining Fixed Fee Land and the plots comprising it are at a fairly advanced stage ready to be made available for public tender. Parts of the Fixed Fee Land will require land reclamation works and Dalian Development has obtained sea use rights for such parts; and for other parts, relocation agreements have been reached with most of the occupiers.

ENTRUSTMENT AGREEMENT

Parties:

(1) PRC Project Companies; and
(2) Dalian Development.

Subject:

Dalian Development will undertake the clearance and land preparation work for such portion of the Land of approximately 4,458,000 square metres constituting the Assign Land. The Assign Land is still in a preliminary stage of land preparation. Substantial clearance works have yet to be carried out and relocation agreements have not been reached with most of the occupiers.

Consideration under the two agreements:

The fees payable under the Service Agreement and the Entrustment Agreement are estimated to be approximately RMB790 million in aggregate (subject to adjustment). Costs to be incurred in respect of the Assign Land will be borne by the PRC Project Companies.

— 14 —

LETTER FROM THE BOARD

The fees of RMB790 million were determined based on arm’s length negotiation with reference to (i) the estimated costs for completing the remaining clearance and reclamation works payable by Dalian Development to third parties in respect of the Fixed Fee Land, and (ii) a remuneration to Dalian Development for overseeing the land preparation works to be done on the Fixed Fee Land and a management fee of RMB80 per square metre for overseeing the land preparation works to be done on the Assign Land. No adjustment will be made to such fee if the actual costs incurred by Dalian Development in respect of the Fixed Fee Land is more than the cost estimate for completing the work over the Fixed Fee Land except where the additional cost arises from a change in the related government policies which will be borne by the PRC Project Companies. The final amount of the management fee payable under the Entrustment Agreement will be determined when the actual size of the Assign Land cleared by Dalian Development is known. The difference between the final management fee as determined and the total management fees already received by Dalian Development under the Entrustment Agreement will be paid to or refunded by Dalian Development, as the case may be.

An initial amount of RMB18.5 million will be payable by the PRC Project Companies to Dalian Development under the Entrustment Agreement within 5 business days after the PRC Project Companies receive their first bank financing (excluding entrustment loan procured by the shareholders) and the subsequent payments under the Entrustment Agreement will be made quarterly with reference to the actual costs incurred for land clearance and preparation. The fee payable under the Service Agreement will also be made quarterly.

FURTHER DETAILS OF THE DALIAN PROJECT

The Dalian Project is a large-scale integrated development project comprising residential, software industry, commercial and retail properties, together with educational and research, outdoor recreation and environmental facilities and other public amenities. It will involve the development, construction, sale, lease, operation and management of Dalian Software Park Phase II at Dalian, PRC. The Dalian Project is expected to comprise nearly 3,608,000 square metres of gross floor area (instead of 3,900,000 square metres as disclosed in the joint announcement of SOCAM and SOL dated 25 May 2007) and is planned for development in 6 phases over a period of 8 to 10 years. The Land comprises 23 plots of land at Dalian Software Park Phase II (divided into the Fixed Fee Land and the Assign Land).

The successful development of the Dalian Project depends on the successful acquisition of the Land and the satisfaction of the conditions to the Transaction Agreements, which may or may not materialise. In particular, the acquisition of the Land (other than the Specified Plots) is by way of competitive bidding and there is no assurance that the Dalian Group will be successful in tendering for all or any piece of the Land.

REASONS FOR THE TRANSACTION

Dalian is recognised as a regional economic centre in northeast China. With rapid growth over the past few years, the software and business process industries in Dalian have been designated among its pillar industries by the Dalian government. It is expected that Dalian will become one of the major information technology and business process outsourcing (ITO/BPO) centres in China.

— 15 —

LETTER FROM THE BOARD

With this background and building on the success of Dalian Software Park Phase I developed by Yida Group, the Dalian Project represents an attractive investment opportunity for the Company. It is intended that, under the current planning, this project will be developed into a world-class software and information service centre accommodating modern enterprises, research and development centres, commercial and residential facilities, and become an international landmark.

The joint venture among SOL, SOCAM and Yida Group will combine the strength, expertise and experience of the partners concerned, and will create considerable synergies. It leverages SOL’s expertise and experience in master planning and large-scale integrated project development in the Mainland, SOCAM’s considerable experience in construction management and design-and-build and local knowledge and relationships in Dalian, and Yida Group’s expertise of Dalian’s local market and development experience in the successful Phase I project.

The Directors believe that Dalian’s ITO/BPO industry will offer excellent growth potential and the Dalian Project will represent a unique investment opportunity.

It is the intention of the Directors to treat Dalian Offshore JV as an associated company. As such, upon completion of formation of Dalian Offshore JV, the Group’s interests in associates will increase by approximately HK$508 million and the Group’s net current assets (representing current assets less current liabilities) will decrease by the same amount. The impact of Dalian Offshore JV on the future earnings of the Group could not be quantified at this stage.

IMPLICATIONS OF THE LISTING RULES

Mr. Lo is the chairman of the Company and has an interest in 63.52% of the issued share capital of the Company as at the Latest Practicable Date. He is also the chairman of SOL in which he has an interest in 53.78% of its issued share capital. Therefore, SOL and Innovate Zone are associates of a connected person of the Company. Accordingly, the formation of the joint venture under the Joint Venture Agreement and the Transaction Agreements constitute a connected and discloseable transaction of SOCAM under Chapters 14A and 14 of the Listing Rules, which is subject to the reporting, announcement and Independent Shareholders’ approval requirements.

GENERAL INFORMATION

SOCAM is principally engaged in distressed property development, cement production, construction, investment in property development and venture capital investment in Hong Kong and the PRC. SOCAM, having been invited by SOL to do so, is taking the opportunity to be involved in the property development described in this circular by applying its project management expertise.

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.

— 16 —

LETTER FROM THE BOARD

Yida Group is a conglomerate with interests in property development, construction and furnishing, equipment manufacturing, software park development, platform development for software and information services, and professional training and education.

APPOINTMENT OF INDEPENDENT FINANCIAL ADVISER

An Independent Board Committee has been established to advise the Independent Shareholders in respect of the terms and conditions of the Transaction Agreements. Anglo Chinese has been appointed as the Independent Financial Adviser to 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 Transaction Agreements.

SPECIAL GENERAL MEETING

Any connected person with a material interest in the transactions contemplated under the Transaction Agreements, and any other Shareholders and their respective associates with a material interest in the transactions contemplated under the Transaction Agreements, shall abstain from voting in respect of the Resolution.

Mr. Lo is the chairman of the Company and has an interest in 63.52% of the issued share capital of the Company as at the Latest Practicable Date. He is also the chairman of SOL in which he has an interest in 53.78% of its issued share capital. Accordingly, Mr. Lo is a connected person of the Company, and SOL and Innovate Zone are associates of a connected person of the Company. Mr. Lo and his associates will abstain from voting in respect of the Resolution.

A proxy form for use at the Special General Meeting is enclosed. Whether or not you are able to attend the Special General 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, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the 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 Special General Meeting and any adjournment thereof (as the case may be) if you so wish.

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

— 17 —

LETTER FROM THE BOARD

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 transactions contemplated under the Transaction Agreements are on normal commercial terms and in the ordinary and usual course of business of the Company; and that the terms and conditions of the Transaction Agreements 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 Special General Meeting.

— 18 —

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 pages 20 and 21 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 Transaction Agreements set out on pages 22 to 36 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 Lo Hong Sui, Vincent Chairman

— 19 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

4 June 2007

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED AND DISCLOSEABLE TRANSACTION

FORMATION OF A JOINT VENTURE FOR THE DEVELOPMENT OF DALIAN SOFTWARE PARK PHASE II

We refer to the circular (the “Circular”) dated 4 June 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 transactions contemplated under the Transaction Agreements 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 transactions contemplated under the Transaction Agreements.

We wish to draw your attention to the letter from the Board, as set out on pages 6 to 19 of this Circular and the text of a letter of advice from Anglo Chinese, as set out on pages 22 to 36 of this Circular, both of which provide details of the Transaction Agreements.

Having considered the terms of the Transaction Agreements, 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 transactions contemplated under the Transaction Agreements are fair and reasonable so far as the Independent Shareholders are concerned and that the transactions contemplated under the Transaction Agreements are in the interests of the Company and the Shareholders as a whole.

* for identification purpose only

— 20 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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

Yours faithfully,

Independent Board Committee of Shui On Construction and Materials Limited Cheng Mo Chi, Moses K.C.

K.C. Chan

Independent Non-executive Director Independent Non-executive Director

— 21 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of the letter from Anglo Chinese to the Independent Board Committee and the Independent Shareholders prepared for the purpose of inclusion in this circular.

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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

4th June, 2007

Dear Sirs,

Formation of a joint venture for the development of Dalian Software Park, Phase II in Dalian in the PRC

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and Independent Shareholders in relation to the Transaction Agreements. Details of the Transaction Agreements are contained in the Circular from SOCAM dated 4th June, 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 Transaction Agreements give rise to a connected and discloseable transaction for SOL and SOCAM under Chapters 14A and 14 of the Listing Rules and the formation of the proposed joint venture is therefore subject to the reporting and announcement requirements set out therein and requires the approval of Independent Shareholders and Independent SOL Shareholders in the prescribed manner.

The connected and discloseable transaction for SOCAM arises because Mr. Lo is the Chairman of SOCAM in which he has a 63.52 per cent shareholding as at the Latest Practicable Date. He is also the Chairman of SOL in which he has a 53.78 per cent shareholding and which will be the major shareholder in the proposed joint venture set out in the Joint Venture Agreement. Accordingly, SOL and Innovate Zone, which is SOL’s investment vehicle for the proposed joint venture, are associates of a connected person of SOCAM. Conversely, the connected and discloseable transaction for SOL arises because SOCAM and Main Zone, which is SOCAM’s investment vehicle for the proposed joint venture, are associates of a connected person of SOL.

— 22 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising two of SOCAM’s independent non executive directors namely, Mr. Cheng Mo Chi, Moses and Professor K. C. Chan has been formed to consider whether the Transaction Agreements are on normal commercial terms, in the ordinary and usual course of business and are fair and reasonable and in the interests of SOCAM and its Shareholders as a whole. Mr. Anthony Griffiths is not a member of the Independent Board Committee as he is currently on vacation and cannot be readily contacted. We have been appointed to advise the Independent Board Committee and Independent Shareholders in respect of these matters.

In formulating our opinion and recommendation, we have relied on the information and facts supplied to us by SOCAM and the opinions expressed by the Directors. We have assumed that the 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. We have not conducted an independent investigation into the affairs of the Group or verified any of the information that we have considered or that has been provided to us and we have not made any physical inspection of the Land or any aspect of it.

We consider we have reviewed sufficient information to reach an informed view 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 SOCAM in connection with this appointment, no arrangement exists whereby Anglo Chinese will receive any benefits from SOCAM 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.

Background

Since the late 1990’s, SOCAM has successfully identified new business streams for diversification and growth and has repositioned SOCAM’s business such that whereas in 1997 only HK$110 million of total assets were in Mainland China and HK$1,995 million were in Hong Kong, the position as at 31st December, 2006 was that HK$9,177 million of total assets were in Mainland China and HK$1,169 million were in Hong Kong.

— 23 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

This diversification has brought considerable benefit to Shareholders as the chart below demonstrates. This chart shows the performance of Shares over the last five years.

Five Year Share Price Performance

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25.0
20.0
15.0
10.0
5.0
0.0
May-02 Nov-02 May-03 Nov-03 May-04 Nov-04 May-05 Nov-05 May-06 Nov-06 May-07
HK$
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These benefits are also illustrated in the table below which shows growth in net assets per Share, earnings per Share and dividends paid by SOCAM over a five year period.

Per Share
HK$	2002	2003	2004	2005	2006*
Net assets	4.68	5.32	7.40	8.92	18.79
Earnings (basic)	-0.18	0.55	1.80	1.16	2.17
Dividends paid	—	0.28	0.60	0.37	0.70

Source: SOCAM’s annual reports

For nine months ended 31st December, 2006

Since 1997, SOCAM has diversified into investment in property development in Mainland China, venture capital investment and distressed property investment and development in Mainland China and has formed a joint venture for its cement operations with global leader Lafarge S.A.. Considerable experience and expertise has been developed by SOCAM over ten years in evaluating and executing property and other transactions in Mainland China.

Meanwhile, SOCAM has continued to develop its construction management and design and build capability which has enabled SOCAM to leverage this competence in the distressed property asset sector in Mainland China so as to manage operational risk and unlock value both in Hong Kong and

— 24 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Mainland China. In 2005, SOCAM began to co-invest in partially completed property projects in the PRC through investment consortia with investors such as JP Morgan, Spinnaker Group, V Ventures Group, Value Partners and Yida Group investing in single blocks of partially completed buildings, requiring limited design modifications and cosmetic upgrades, to produce a quality property.

One of SOCAM’s most important achievements was to invest in SOL in February, 2004, which is now one of the leading property developers in Mainland China with considerable experience and success in master planning and large scale integrated project development in Mainland China. SOCAM has a 17.8 per cent shareholding in SOL which was listed on the Stock Exchange in October, 2006 and presently has a stock market capitalisation of about HK$27 billion and is also controlled by Mr. Lo.

SOCAM, SOL and the Yida Group have identified what they believe is an attractive investment opportunity, namely the Dalian Project which comprises the second phase of the Dalian Software Park in the PRC, the first phase of which is substantially complete and substantially fully taken up, principally by international companies seeking to outsource all or part of their business processing and software design to Mainland China.

Background on the Dalian Software Park Phase I and II

SOCAM was invited by SOL to co-invest in Dalian Software Park Phase II in view of SOCAM’s project management expertise, and its previous relationships with Yida Group having co-invested in a number of property development and, or distressed property development projects in Mainland China.

SOCAM and SOL have carried out extensive research and enquiry into the prospects for the Dalian Software Park Phase II and have shared this information with us and we have reviewed the various reports referred to below.

Enright, Scott and Associates, Ltd (“ESA”) have been engaged to study the emerging technology and business process outsourcing industries, making an analysis of the success of Bangalore, India’s software centre for English language outsourcing and a study of Dalian’s prospects and a master plan has been prepared by Skidmore, Owings Merrill (“SOM”) for the Software Park Phase II which has been presented to the Dalian City Government which is strongly supportive of it.

Debenham Tie Leung Limited (“DTZ”) has been engaged to provide a property assessment for Dalian and a valuation of the Specified Plots comprising part of the Land to be acquired under the Transaction Agreements.

A due diligence investigation has been commissioned from Ernst & Young and Victory Law Office of Liaoning.

The ESA study suggests that Dalian is an economically vibrant city having become one of the top five Mainland Chinese cities in attracting foreign investment, particularly from Japan and South Korea. According to the ESA study, Dalian is now the largest city economy in Northeast China and Mainland China’s principal gateway to North East Asia.

— 25 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Dalian has been designated by the Ministry of Information Industry as one of the six national software export bases: the others being Shanghai, Beijing, Xian, Shenzhen and Tianjin.

The Directors’ assessment of the property market in China shows that the rapidly growing economy in Dalian has produced strong growth in residential property prices, high occupancy rates in five star hotels and grade A office space and the outlook for all categories of property there remain positive.

Dalian Grade ‘A’ Office Supply, Sold and Selling price, 2000-2005

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350,000 10,000
300,000 9,000
8,000
250,000
7,000
200,000 6,323
5,896
5,530 6,000
150,000 4,820 4,354 4,741 5,000
100,000
4,000
50,000 3,000
0 2,000
2000 2001 2002 2003 2004 2005
supply sold selling price
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(Source: Statistics Bureau of China)

Phase I of the Dalian Software Park

The Dalian Software Park is intended to provide a state of the art facility for emerging technology outsourcing and business process outsourcing demand, primarily from the Japanese and Korea markets which Dalian is geographically well positioned to serve since Mainland China has a leading position in the Japanese and Korean IT outsourcing market.

The Gross Floor Area Breakdown of Phase 1 of the Dalian Software Park is as follows:

Square metres Office 600,000 Education 300,000 Residential 400,000 Total 1,300,000

— 26 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Substantially all of the above area is leased or sold. A further 300,000 square metres is under construction, mostly residential development, and 80,000 square metres of the remaining software park office has been pre leased to existing tenants by August, 2006.

Phase I was developed by Yida Group which now intends to joint venture with SOL and SOCAM to develop Phase II, in terms of the Transaction Agreements.

Background on Yida Group

Yida Group was founded in 1984 and is a PRC based conglomerate comprising more than 30 companies and is a prominent property developer in Dalian. Dalian Development, which has prepared the Land, is a party to the Asset Transfer and Compensation Agreement, the Service Agreement and Entrustment Agreement and is 90 per cent owned by the Yida Group.

Yida Group has operations in property development, construction and finishing, equipment manufacturing, software park development, platform development for software and information services and professional training and education services.

Yida Group has co-invested with SOCAM in property development and/or distressed property investment in the following projects:

						Respective
						share of
					Completion	project
			Gross	Commencement	or expected	SOCAM/Yida
		Use	floor area	of development	completion	Group
			(in square
			metres)			(per cent)
1.	Beijing Shengyuan	Office and	42,400	2006	Last quarter	37.5/37.5
	Centre	retail			in 2007
2.	Dalian Xiwang	Office	88,370	2005	First quarter	48/32
	Building				in 2007
3.	Qingdao Central	Residential,	64,000	2006	Third quarter	50/15
	International Plaza	office and			in 2007
		retail

Phase II of the Dalian Software Park

Phase II is a large scale integrated development project comprising residential, software industry, commercial and retail properties together with educational and research, outdoor recreation and environmental facilities and other public amenities. It will involve the development, construction and management of the Dalian Software Park. At this stage, the Dalian Project will involve the purchase

— 27 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

of a large parcel of raw land. The consideration payable by SOL, SOCAM and Yida Group under the Transaction Agreements is to be used to acquire and clear part of the land bank necessary for the project and does not include construction and related costs or any of the other costs that such a project will incur.

The Dalian Project at completion of all construction is expected to comprise approximately 3,608,000 square metres of gross floor area made up as follows:

	Square metres
Office, hotels, retail, entertainment	612,000
Education and other public facility	239,000
Residential	1,070,000
Software park support facilities	405,000
Software industry	1,282,000
Total	3,608,000

According to the current development plan, the project will be constructed in six phases over an eight to ten year period.

The Dalian Software Park Phase II comprises 23 plots of land and is divided into the Fixed Fee Land and the Assign Land.

The Fixed Fee Land is the land comprising 16 plots of land containing an aggregate of approximately 2,524,000 square metres where substantial clearance work has already been carried out but where some reclamation work will be needed and Land Use Certificates are already held by Dalian Development in respect of the Specified Plots. Assign Land is seven plots of land containing an aggregate of approximately 4,458,000 square metres which require substantial preparation work and where relocation agreements have not been signed by most of the occupiers.

Calculations made by the Directors suggest that the Dalian Project is estimated to yield an IRR of 23 per cent over the development period.

REASONS FOR FORMING THE JOINT VENTURE

The Directors believe that the principal reasons for entering into the Joint Venture Agreement

are:

the macro indicators for economic growth and for the Dalian Software Park are positive;
it offers an attractive opportunity to continue to expand SOCAM’s core competence in construction and project management in property projects;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

it continues to expand SOCAM’s investments in property development in Mainland China beyond its investments in cement, venture funds, distressed property and SOL;
it allows SOCAM to enhance its reputation in property project management in Mainland China and presence in the real estate market in Dalian, and strengthen its established relationships with the Dalian government;
it does so under the leadership of SOL and with its brand name and experience of major integrated development projects in Mainland China;
it does so in conjunction with a known and an optimal business partner in Dalian, Yida Group through which, three other property investments exist between it and SOCAM;
the Dalian Project is projected by the Directors to offer attractive financial returns in the long term; and
funds for the investment are available to SOCAM which has access to the resources necessary to take on this investment.

PRINCIPAL TERMS OF THE TRANSACTION AGREEMENTS

Set out below are the principal terms of the Transaction Agreements and the various agreements in which they are comprised.

The Joint Venture Agreement

This agreement sets out the framework for the Dalian Project.

The parties are:

SOL, which will invest approximately HK$1,108 million in shareholders’ loans through its wholly owned investment vehicle, Innovative Zone in terms of the Joint Venture Agreement;
SOCAM, which will invest approximately HK$508 million in shareholders’ loans through its wholly owned investment vehicle, Main Zone in terms of the Joint Venture Agreement; and
Yida Group, which will invest approximately HK$185 million in shareholders’ loans through its wholly owned investment vehicle, Many Gain in terms of the Joint Venture Agreement.

— 29 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Together, the parties will contribute capital to the Dalian Offshore JV in proportion to their shareholdings as to shareholders’ loans in the amounts specified above and as to a paid up share capital of US$780, rateably to their shareholding interests in both cases:

Per cent shareholding interest

SOL	61.54
SOCAM	28.20
Yida Group	10.26

The shareholders’ loans will first be advanced by SOL and SOCAM and will be non-interest bearing until Yida Group pays up its portion of the shareholders’ loan from dividends to be received by it from the Dalian Project. Thereafter shareholders’ loans will be interest bearing at five per cent per annum. The non payment of interest on shareholders’ loans until Yida Group pays up its portion carries an opportunity cost for SOL and SOCAM but is effectively a cost to SOL and SOCAM of entering into these arrangements and is in our opinion a commercial term thereof. The shareholders’ loans are unsecured and repayable on demand.

In the event that any further funding is required for the development of the Dalian Project, any such loans will be guaranteed, if required by the lender, by SOL, SOCAM and Yida Group severally up to a maximum aggregate amount of RMB500 million in the ratio of 48/22/30.

The aggregate investment in the Dalian Project comprises RMB500 million, plus approximately HK$1,800 million as set out above and an amount of about RMB495 million to be contributed by the Yida Group to the PRC Project Companies or about HK$2,800 million in total. The contribution from the Yida Group comprises RMB264 million, being 22 per cent of the total registered capital of the PRC JV Companies of RMB1,200 million as set out in the Equity Interest Transfer Agreements, and a loan of RMB231 million as set out in the Onshore Shareholders Agreements and described more fully later in this letter.

The Joint Venture Agreement is inter conditional upon the execution of the other Transaction Agreements and all necessary consents, government approvals and foreign exchange approvals.

Under the Joint Venture Agreement, the Dalian Offshore JV will form four wholly owned SPVs, which in turn will hold four separate wholly owned investment chains each to hold a single 78 per cent equity interest in one PRC JV Company. Accordingly, each of these four PRC JV Companies will be owned as to 22 per cent by Yida Group and 78 per cent by the Dalian Offshore JV as described above.

Of the four PRC JV Companies, two PRC JV Companies will own jointly, on a 50/50 basis, the entire registered capital of one PRC Project Company and the other two PRC JV Companies will own jointly, on a 50/50 basis, the entire registered capital of the other PRC Project Company. There will be two PRC Project Companies and they will collectively undertake the Dalian Project. The PRC Project Companies will be acquired by the SPV from Yida Group for cash in terms of the Transactions Agreement.

— 30 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Under the Joint Venture Agreement, SOCAM will have the right to appoint three directors to the board of directors of the Dalian Offshore JV and SOL and Yida Group through their respective investment vehicles will have the right to appoint four directors and three directors respectively.

Thus, between them SOCAM and SOL will appoint seven of the ten directors of the Dalian Offshore JV.

Under the Joint Venture Agreement, Innovate Zone, Main Zone and Many Gain will agree not to compete with each other in respect of business relating to any development or leasing of office buildings for use by the software industry (save for land preparation work prior to land use rights being obtained) in the Dalian city for a period of three years after the Dalian Onshore Group has been set up, other than with the prior consent of the other parties. After such three year period, if any one of the parties or its affiliates:

(1) intends to engage in such a competing business, it shall first invite the PRC JV Companies to participate in the business opportunity on a 50/50 basis; or
(2) is offered an opportunity to co-invest in any competing business by a third party, any one of the parties or the affiliates may not do so other than with the PRC JV Companies’ consent or on a 50/50 basis with it.

We consider the principal terms of the Joint Venture Agreement which sets out the framework for the Dalian Project to be on normal commercial terms, and to be fair and reasonable and in the interests of SOCAM and Independent Shareholders.

Equity Interest Transfer Agreements

Accordingly, there are four Equity Interest Transfer Agreements for the purchase by the SPV of a 78 per cent equity interest in each of the PRC JV Companies from Yida Group and four Onshore Shareholders Agreements in respect of the operation of each of these four companies.

The aggregate consideration for the four Equity Interest Transfer Agreements will be RMB936 million which will be in respect of 78 per cent of the registered capital of each of the PRC JV Companies which will have in aggregate a total paid up registered capital of RMB1,200 million.

This RMB936 million will be paid in cash into an escrow account in Dalian jointly controlled by the SPV and Yida Group upon the Equity Interest Transfer Agreements becoming unconditional and released in stages to Yida Group when the existing mortgages on the Specified Plots have been released by existing PRC bank creditors and title to the Specified Plots is transferred to the PRC Project Companies.

We consider the aggregate consideration for the four Equity Interest Transfer Agreements and the payment terms to be on normal commercial terms, and to be fair and reasonable and in the interests of SOCAM and Independent Shareholders.

— 31 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Equity Interest Transfer Agreements will become unconditional upon (i) all necessary PRC Government approvals having been obtained in respect of the transfer of shareholdings and the change in the status of the PRC JV Companies from domestic enterprises to Sino-foreign Joint Ventures; (ii) the setting up and completing the contribution to the registered capital of the PRC Project Companies; and (iii) the execution of the Asset Transfer and Compensation Agreement, the Service Agreement and the Entrustment Agreement.

Onshore Shareholders Agreements on PRC JV Companies

Under the four Onshore Shareholders Agreements that comprise the PRC JV Companies, the SPV will have the right to nominate five directors (three directors from Innovate Zone and two directors from Main Zone) and Yida Group will nominate two to each such board of directors.

SPV and the Yida Group will lend approximately RMB639 million and RMB231 million respectively to the PRC JV Companies to meet additional funding needs by way of shareholders’ loans at an interest rate of ten per cent per annum or by arranging an entrustment loan for the Dalian Project. The contribution ratio of 73/27 for these loans is a commercial term of the Onshore Shareholders Agreements calculated by reference to the respective equity interests of SPV and the Yida Group in the PRC JV Companies. It is expected that this additional funding will be made within six months of the signing of the Onshore Shareholders Agreements. The Directors and the directors of SOL expect the PRC Project Companies to be able to raise funds locally for the Dalian Project. Save for the funding and guarantee set out in the Joint Venture Agreement and the Onshore Shareholders Agreements, the Directors and the directors of SOL believe that no further funding or financial assistance will be required from SOCAM or SOL in relation to the Dalian Project.

We consider the financing arrangement set out in the Onshore Shareholders Agreements to be on normal commercial terms, and to be fair and reasonable and in the interests of SOCAM and Independent Shareholders.

The Asset Transfer and Compensation Agreement and Specified Plots

This agreement will be between the PRC Project Companies and Dalian Development. Under this agreement:

Dalian Development will be compensated for work already done in clearing and preparing the Land;
Dalian Development will transfer the Specified Plots and be reimbursed for the land grant fee paid by them to the PRC Government;
Dalian Development will assist in obtaining the Land and pay to the Dalian Onshore Group any compensation it may receive from the PRC Government in respect of clearance work in the event that the land use right of any part of the Land is granted to a third party; and
Dalian Development and the Yida Group will not otherwise bid for the Land.

— 32 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Consideration under the Asset Transfer and Compensation Agreement

The consideration to be paid to Dalian Development under this Agreement will be RMB2,000 million and will be funded in terms of the Joint Venture Agreement by SOL, SOCAM and Yida Group as set out below.

(i) when the SPV has fulfilled its funding obligations of RMB639 million pursuant to the Onshore Shareholders Agreements, a series of cash payments totalling RMB1,820 million will be made in stages and paid into a designated account:
(a) an amount of RMB1,431 million will be used by the Yida Group for repayment of its outstanding loans to the Dalian Onshore Group, and for paying up the capital contribution to be made by the Yida Group to the PRC JV Companies under the Onshore Shareholders Agreements in the amount of RMB231 million; and
(b) an amount of RMB389 million together with the reimbursement of approximately RMB140 million in respect of the land grant fee paid by Dalian Development will be released when title of the Specified Plots is transferred to the PRC Project Companies and the Yida Group has utilised the RMB1,431 million as described above; and
(ii) the balance of the consideration in the amount of RMB180 million will be paid when Yida Group has paid up its share of the loan in the amount of HK$184.62 million to be contributed under the Joint Venture Agreement.

We note that the consideration of RMB2,000 million for the asset transfer and compensation was determined with reference to (i) the valuation carried out by DTZ on the Specified Plots as at 21st May, 2007 of RMB735 million and (ii) the costs amounting to RMB1,660 million that Dalian Development has so far incurred in clearing and preparing part of the Land.

We consider the basis of determining the consideration for the asset transfer and compensation, and the payment terms to be on normal commercial terms, and to be fair and reasonable and in the interests of SOCAM and Independent Shareholders.

The Service Agreement and Entrustment Agreement

These agreements will be between the PRC Project Companies and Dalian Development, whereby Dalian Development will undertake the clearance work and, or, land reclamation work on the portion of the Land constituting the Fixed Fee Land, and will oversee the clearance and land preparation work to be done on the Assign Land.

Consideration for the Service Agreement and the Entrustment Agreement

The PRC Project Companies will pay Dalian Development a fee of approximately RMB790 million. We understand that this fee was determined based on arm’s length negotiations with reference to (i) the estimated costs for completing the remaining clearance and reclamation work which will be payable by Dalian Development in respect of the Fixed Fee Land, and (ii) a payment to Dalian

— 33 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Development calculated with reference to the total area of the Land and the extent of clearance and reclamation work that will need to be done before development work can commence. The fee payable in respect of the Fixed Fee Land will not be adjusted unless additional cost arises from a change in the related PRC Government Policies. The PRC Project Companies will also bear the costs to be incurred in respect of the Assign Land.

An initial fee, under the Entrustment Agreement, of RMB18.5 million will be paid within five business days after the PRC Project Companies receive their first bank financing (excluding entrustment loans procured by shareholders) and subsequent payments will be made quarterly with reference to the actual costs incurred for land clearance and preparation. The fee payable under the Service Agreement will also be made quarterly.

We consider the basis of determining the consideration for the Service Agreement and the Entrustment Agreement and the payment terms under these agreements to be on normal commercial terms, and to be fair and reasonable and in the interests of SOCAM and Independent Shareholders.

FINANCIAL EFFECTS ON SOCAM

1. Net assets

As at 31st December, 2006, the audited net asset value of the Group amounted to approximately HK$5,216 million. Under the Joint Venture Agreement, SOCAM will via its wholly owned investment vehicle invest US$220 for a 28.20 per cent shareholding in the Dalian Offshore JV and shall provide a HK$508 million shareholders’ loan to fund its part of the acquisition under the Equity Interest Transfer Agreements and the consideration payable under the Asset Transfer and Compensation Agreement.

SOCAM will ultimately hold an effective 22 per cent of the Dalian Project, which will be accounted for as an associated company of the Group. As such, we are of the opinion that the investment together with the afore-mentioned loan will comprise a reasonably modest part of the Group’s net assets, but has the potential to make a significant contribution in the future as the Dalian Project is developed.

2. Earnings

According to the 2006 annual report of the Group, net profit after taxation attributable to Shareholders was approximately HK$602.1 million.

As mentioned above, the Dalian Project will be completed in phases over the next eight to ten years. Since the Dalian Project is a greenfield project and has yet to commence development and construction work, the future effect on earnings for the Group cannot be determined at this stage. However, returns from pre sales may be realised as early as 2009.

3. Liquidity

As stated in the Group’s annual report for the financial year ended 31st December, 2006, the Group had bank balances, deposits and cash of approximately HK$64.8 million and pledged bank

— 34 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

deposits of approximately HK$200.5 million while bank borrowings due within one year amounted to approximately HK$2,394.8 million. It is currently expected that the funding for the Dalian Project under the Transaction Agreements will be sourced from the Group’s internal cash reserves and external bank borrowings. Subsequent to the balance sheet date, the Group has renewed and obtained additional banking facilities of approximately HK$2,030 million from financial institutions.

On the basis of the loan commitment of HK$508 million from SOCAM to the Dalian Offshore JV and the current cash position and unutilised bank borrowing of the Group, we are of the view that SOCAM has sufficient working capital to make its investment in the Dalian Project.

4. Financing SOCAM’s Investment in the Joint Venture

SOCAM’s investment of approximately HK$508 million will be funded by SOCAM’s internal resources and unutilised bank facilities in excess of HK$700 million as at 30th April, 2007.

5. Gearing

Based on the audited financial statements of the Group as at 31st December, 2006, the net gearing ratio of the Group stood at approximately 68 per cent, down from 118 per cent as at 31st March, 2006. Upon completion of the investment contemplated under the Transaction Agreements, the Group will incur a net cash outflow of approximately HK$508 million.

This investment will have the effect of increasing the estimated gearing ratio of the Group to approximately 78 per cent on the assumption that a portion of the loan commitment will be internally funded by the Group’s bank balances, deposits and cash and the remainder of the loan commitment financed by external bank borrowings.

RISK FACTORS

The successful development of the Dalian Project as a whole and as it is currently envisaged depends on the successful acquisition of the Land and the satisfaction of the conditions to the Transaction Agreements which may or may not occur, including in particular the approval of Independent Shareholders and Independent SOL Shareholders.

Other than for the Specified Plots, the acquisition of the Land is by competitive bidding and there is no assurance that the Dalian Onshore Group will be successful in tendering for all or any plot of the Land. However, in view of the strong support of the Dalian City Government and given the standing of SOL, SOCAM and the Yida Group in this matter, the Directors believe that it is reasonably likely that the Land will be acquired.

In the event that another party obtains the Land or part if it, the Directors believe that it is reasonably likely that the PRC Government would reimburse clearance costs incurred by Dalian Development which would pay these to the PRC Project Companies in terms of the Asset Transfer and Compensation Agreement. There is however no undertaking or agreement that this reimbursement would be made rather it is the view of the Directors that such a reimbursement would be consistent with past practice.

— 35 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In such circumstances, the Dalian Offshore JV would be comprised of only the Specified Plots containing about 1,264,000 square metres of land but these are valued by DTZ at RMB 735 million as at 21st May, 2007 and would in themselves comprise a profitable investment.

If the Joint Venture Agreement and, or, the Asset Transfer and Compensation Agreement do not become unconditional, no investment will be made by SOCAM.

Otherwise, the investment is subject to risk normal in investments of this type in Mainland China which SOL and SOCAM have been evaluating and executing successfully for many years.

RECOMMENDATION

Having considered the principal factors and reasons for this investment which are set out above, we consider that the Transaction Agreements are on normal commercial terms, in the ordinary and usual course of business and are fair and reasonable and in the interests of SOCAM, 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 Special General Meeting to approve the Transaction Agreements and that the Independent Board Committee advises Independent Shareholders accordingly.

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

— 36 —

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 Companies 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	—	188,915,000	65.98%
		(Note)
Choi Yuk Keung, Lawrence	3,083,000	—	1.08%
Wong Fook Lam, Raymond	700,000	—	0.24%
Lowe Hoh Wai Wan, Vivien	396,000	—	0.14%

Note: These shares comprise 181,871,000 shares beneficially owned by Shui On Company Limited (“SOCL”) and 7,044,000 shares and underlying shares deemed to be interested by SOCL under sections 317 and 318 of the SFO.

— 37 —

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 is a discretionary beneficiary and HSBC International Trustee Limited is the trustee. Accordingly, Mr. Lo, 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

	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	—	1,600,000	0.56%
		(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.

— 38 —

GENERAL INFORMATION

APPENDIX

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
	Date of	price per	outstanding	subject to
Name of Director	grant	share	are exercisable	the options
		HK$
Choi Yuk Keung,	3-1-2007	16.78	3-1-2010 to	700,000
Lawrence			2-1-2017
Wong Yuet Leung,	27-8-2002	6.00	27-8-2005 to	1,600,000
Frankie			26-8-2010
	1-8-2006	14.00	1-2-2007 to	2,000,000
			31-7-2011
	3-1-2007	16.78	3-1-2010 to	1,500,000
			2-1-2017
Wong Fook Lam,	1-8-2006	14.00	1-2-2007 to	176,000
Raymond			31-7-2011
	3-1-2007	16.78	3-1-2010 to	700,000
			2-1-2017
Lowe Hoh Wai	27-8-2002	6.00	27-8-2005 to	660,000
Wan, Vivien			26-8-2010
	1-8-2006	14.00	1-2-2007 to	150,000
			31-7-2011
	3-1-2007	16.78	3-1-2010 to	625,000
			2-1-2017

— 39 —

APPENDIX

GENERAL INFORMATION

(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 shares	Number of ordinary shares	Approximate
	in SOL		percentage of
	Personal	Other	shareholding
Name of Director	interests	interests	in SOL
Lo Hong Sui, Vincent	—	2,250,565,225	53.78%
		(Note)

Note: These shares are directly held by subsidiaries of SOCL, namely Shui On Properties Limited, Shui On Investment Company Limited and New Rainbow Investments Limited. 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 is a discretionary beneficiary and HSBC International Trustee Limited is the trustee. Accordingly, Mr. Lo is deemed to be interested in such shares under the SFO.

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 Companies 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.

— 40 —

APPENDIX

GENERAL INFORMATION

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:

				Approximate
				percentage of
Name of	Class of		Number of	shareholding in
shareholders	shares	Capacity	shares held	the Company
Louis Wong	Ordinary	Beneficial owner/	188,915,000(L)	65.98% (L)
		interests of party to	(Note ii)
		an agreement to
		acquire shares under
		sections 317 and
		318 of the SFO
Wilfred Wong	Ordinary	Beneficial owner/	188,915,000(L)	65.98% (L)
		interests of party to	(Note ii)
		an agreement to
		acquire shares under
		sections 317 and
		318 of the SFO
Cheah Cheng Hye	Ordinary	Interest of	14,238,000(L)	4.97% (L)
		controlled	(Note iii)
		corporation
Value Partners	Ordinary	Investment manager	14,238,000(L)	4.97% (L)
Limited			(Note iii)
Citigroup Inc.	Ordinary	Interest of	14,675,501(L)	5.13% (L)
		controlled	702,000 (P)	0.25% (P)
		corporations/holder
		of security interest
		in shares/custodian
		corporation/
		approved lending
		agent

— 41 —

GENERAL INFORMATION

APPENDIX

				Approximate
				percentage of
Name of	Class of		Number of	shareholding in
shareholders	shares	Capacity	shares held	the Company
John Zwaanstra	Ordinary	Interest of	25,185,249(L)	8.80% (L)
		controlled
		corporation
Penta Investment	Ordinary	Investment manager	25,185,249(L)	8.80% (L)
Advisers Limited
Todd Zwaanstra	Ordinary	Trustee	14,226,950(L)	4.97% (L)
Penta Japan Fund,	Ordinary	Interest of	14,226,950(L)	4.97% (L)
Ltd.		controlled
		corporation
Mercurius GP LLC	Ordinary	Founder of a	14,226,950(L)	4.97% (L)
		discretionary trust
UBS AG	Ordinary	Beneficial owner/	14,347,453(L)	5.01% (L)
		holder of security	5,560,000(S)	1.94% (S)
		interest in shares

Notes:

(i) The letter “L” denotes a long position, the letter “S” denotes a short position and the letter “P” denotes interest in a lending pool.
(ii) 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.
(iii) These shares are held by Value Partners Limited which is controlled by Mr. Cheah Cheng Hye.

— 42 —

GENERAL INFORMATION

APPENDIX

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

|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
|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|Aluminum|Engineering|Co.|
|Industrial|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|Engineering|Company|Limited|
|Industrial|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%|[#]|
|15%|
|(Shanghai|Shui|On|
|Construction|Co.,|Ltd.)|
|15%|
|(SIG|Investment|Management|(Shanghai|Shui|On|
|Co.,|Ltd.)|Construction|Co.,|Ltd.)|

----- End of picture text -----

— 43 —

GENERAL INFORMATION

APPENDIX

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----- End of picture text -----

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.
(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.

— 44 —

GENERAL INFORMATION

APPENDIX

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. Wong Fook Lam, Raymond, a fellow of the Institute of Chartered Accountants in England and Wales and the Hong Kong Institute of Certified Public Accountants and an associate of the Institute of Chartered Accountants of Australia.
(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, Wanchai, Hong Kong.
(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, Wanchai, Hong Kong.

— 45 —

GENERAL INFORMATION

APPENDIX

(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, Wanchai, Hong Kong from the date of this circular up to and including 20 June 2007:

(a) the Joint Venture 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.

— 46 —

NOTICE OF SPECIAL GENERAL MEETING

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==> picture [149 x 32] intentionally omitted <==

==> picture [7 x 6] intentionally omitted <==

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----- End of picture text -----*

(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, Wanchai, Hong Kong on Wednesday, 20 June 2007 at 5:30 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 Transaction Agreements (as defined in the circular to shareholders of the Company dated 4 June 2007 and copies of which have been produced to this meeting marked “A” and signed by the chairman of this meeting for the purpose of identification), and the transactions contemplated thereunder be and are hereby approved, 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 Transaction Agreements and all other transactions of the Company which arise following completion of the Transaction Agreements and all other transactions contemplated thereunder with any changes as such Director(s) may consider necessary, desirable or expedient.”

By Order of the Board Sincere Wong Company Secretary

Hong Kong, 4 June 2007.

for identification purpose only

— 47 —

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, Wanchai, 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), Mr. Wong Fook Lam, Raymond 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, Mr. Cheng Mo Chi, Moses and Professor K.C. Chan.

— 48 —

AI assistant

Long Investment Corp — Proxy Solicitation & Information Statement 2007

50512_rns_2007-06-04_b5b762ae-2130-401f-bd54-1ea1a6490b3e.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

CONNECTED AND DISCLOSEABLE TRANSACTION

FORMATION OF A JOINT VENTURE FOR THE DEVELOPMENT OF DALIAN SOFTWARE PARK PHASE II

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

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

CONNECTED AND DISCLOSEABLE TRANSACTION

FORMATION OF A JOINT VENTURE FOR THE DEVELOPMENT OF DALIAN SOFTWARE PARK PHASE II

INTRODUCTION

1. JOINT VENTURE AGREEMENT

Parties:

Subject:

Shareholding and subscription monies:

LETTER FROM THE BOARD

Conditions:

Board representation and control:

Loan:

LETTER FROM THE BOARD

Non-Competition:

2. OTHER TRANSACTION AGREEMENTS

Parties:

Assets involved:

Consideration:

Source of funding:

Conditions to completion:

Completion:

B. ONSHORE SHAREHOLDERS AGREEMENTS ON PRC JV COMPANIES (comprising 4 onshore shareholders agreements in total)

Parties:

Subject:

Shareholding:

Board representation and control:

Future funding:

C. ASSET TRANSFER AND COMPENSATION AGREEMENT

Parties:

Subject:

Consideration:

LETTER FROM THE BOARD

D. SERVICE AGREEMENT AND ENTRUSTMENT AGREEMENT

SERVICE AGREEMENT

Parties:

Subject:

ENTRUSTMENT AGREEMENT

Parties:

Subject:

Consideration under the two agreements:

LETTER FROM THE BOARD

FURTHER DETAILS OF THE DALIAN PROJECT

REASONS FOR THE TRANSACTION

LETTER FROM THE BOARD

IMPLICATIONS OF THE LISTING RULES

GENERAL INFORMATION

LETTER FROM THE BOARD

APPOINTMENT OF INDEPENDENT FINANCIAL ADVISER

SPECIAL GENERAL MEETING

LETTER FROM THE BOARD

PROCEDURES FOR VOTING BY POLL

RECOMMENDATION

ADDITIONAL INFORMATION

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

CONNECTED AND DISCLOSEABLE TRANSACTION

FORMATION OF A JOINT VENTURE FOR THE DEVELOPMENT OF DALIAN SOFTWARE PARK PHASE II

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Formation of a joint venture for the development of Dalian Software Park, Phase II in Dalian in the PRC

INTRODUCTION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS

Background

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Five Year Share Price Performance

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Background on the Dalian Software Park Phase I and II

Dalian Grade ‘A’ Office Supply, Sold and Selling price, 2000-2005

Phase I of the Dalian Software Park

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Long Investment Corp Proxy Solicitation & Information Statement 2007